Around the time when my first story featuring Pinterest (NYSE:PINS) was published, shares of the social media firm had recently closed at an all-time high. Naturally, enthusiasm was sky-high for Pinterest stock. Compared to its initial public offering price, PINS had almost doubled in market value.
Yet on Aug. 27, I took a contrarian approach — and likely for an unpopular reason. Although I acknowledged incredibly favorable demographic metrics for PINS stock, one stood out as an extreme liability: the company’s subscriber numbers skewed heavily female. And it’s not even close. According to data compiled by Omnicore, 70% of Pinterest users are female.
Now, in many cases, a strong allocation toward women is very favorable. For instance, if Match Group (NASDAQ:MTCH) had such a ratio, the company would attract countless single gentlemen.
Moreover, I’m not surprised that women love Pinterest. SocialMediaToday contributor and freelance social media consultant Aleksandra Atanasova writes, “Research shows that men are more likely to use social media to seek information, while women use social platforms to connect with people.” Combining the social element with consumerism resonates with female users, driving the narrative for PINS stock.
However, that narrative is largely one-sided, which is where I have a problem. Based on data from the Pew Research Center, the gender ratio for Facebook (NASDAQ:FB), Instagram, LinkedIn and Twitter (NYSE:TWTR) is much more balanced than Pinterest. As a social media firm, that doesn’t spell a great future for Pinterest stock.
As a free-to-use service, Pinterest makes its money off advertising dollars. But with competition for those dollars fierce, why should advertisers elect a demographically slanted platform? As I said in my last article, advertising is about more exposure, not less.
Even with its Decline, Pinterest Stock Is Still Risky
Since Aug. 27, fortunes have reversed for PINS stock. At time of writing, shares were down nearly 23%. The volatility places the equity pricing very close to its first trading session, where it finished at $24.40.
Is Pinterest stock a buy now? As a caveat, I’ll leave open the possibility of a dead cat bounce. But the more I consider the fundamentals for the company, the more I’m concerned.
First, it’s not just the fact that Pinterest skews heavily female. Rather, current trends suggest that this imbalance won’t resolve itself anytime soon. While 40% of new Pinterest signups are men, 60% of new signups are women.
Second, 42% of American women use Pinterest, but a whopping 80% of internet-using American mothers engage the platform. That clues me into the possible dynamic that women care more about Pinterest’s social element than the commercial factor.
But a third and most damning point against Pinterest stock is the men. Only 7% of the site’s total pins come from men.
That takes me full circle back to Atanasova’s point: Men and women use Pinterest differently. And because men use social media primarily to seek information, let’s deduct this logically. Men don’t find the platform “Pinteresting.” Obviously, this is not a great look for PINS stock.
Moreover, why would they be? Clearly, Pinterest is not only mostly attracting women, it is attracting a specific kind of women: moms. The very low male engagement continues to hurt Pinterest stock.
Lingering Questions About Usability
If you were hoping to hear some good news about PINS stock, fret not. InvestorPlace contributor Will Ashworth offered the contrarian case with a personal and interesting story. Ashworth wrote:
I went to high school with a friend who became a dentist by vocation. But he made a living as an entrepreneur and real estate investor. Even in university, he would drive by a property that looked interesting and enter the realtor’s details into the portable tape recorder he carried in his car precisely to jot this information down.
When he got home, he would immediately call the realtor to get more details.
I didn’t know it at the time, but that was the precursor to Pinterest or Instagram.
If Pinterest can better capture the demand for all things traditionally considered “masculine,” I’ll take back what I said about PINS stock.
But that’s not what the hard data shows. Instead, Pinterest is primarily used by women. Until management can turn this demographic situation around, I don’t see advertisers getting too excited about PINS.
As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.
