The past month has not been good for Pinterest (NYSE:PINS). It’s lost 23% of its value. Over the past three months, PINS stock is down 40% through Nov. 8. 

Pinterest stock is currently trading just slightly more than $1 above its April IPO price of $19. And should the PINS stock price fall below that level, aggressive investors ought to consider picking some up. Here are three reasons why.

Veteran Canadian money manager Stephen Jarislowsky wrote in his 2005 book The Investment Zoo that you can often pick up IPO stocks for less than their issue price within 12-24 months of going public. For this reason, he avoided new issues. 

Pinterest stock gained 28.4% on April 17, its first day of trading, getting as high as $36.83 in August before coming back down to earth. Pinterest priced higher than its pre-IPO range of $15-$17, so it wasn’t surprising it had such a good first day. 

Now that PINS stock is down to $20, its Oct. 14 lockup expiration has passed, and its disappointing third-quarter 2019 results are in the rear-view mirror, there’s unlikely to be any more negative catalysts for awhile. 

That said, there’s a good possibility that this falling knife will keep falling until at least February. That’s when it announces its fourth-quarter results. Until then, there’s little to push it higher. 

So, if you’re big on Pinterest and have yet to buy its stock, you have lots of time to wait for a better entry point, hopefully below $19. 

Pathway to Profitability

Pinterest expects to lose between $10 million and $30 million on an adjusted EBITDA basis in 2019 with projected sales of between $1.1 billion and $1.12 billion. Both the top- and bottom-line projections are slightly higher than its previous forecast from the beginning of the fiscal year.

It’s hard to believe Pinterest’s outlook for the year could be considered a disappointment because of a possible $20 million difference in sales at the low-end of its guidance. I could see this being an issue if the difference were $100 million or more.

That’s how crazy the markets have become.

The reality is that Pinterest’s international business has the potential to be so much bigger in terms of profits than in the U.S. that it seems incredibly trivial for investors to concern themselves over $20 million in revenue.

In the third quarter year-over-year it grew its monthly active users to 235 million, 38% higher than in the same period a year earlier.  Its international MAUs are now almost three times the number in the U.S.

In the third quarter, its average revenue per user (ARPU) in the U.S. was $2.93, 26% higher than in Q3 2018. Internationally, its ARPU was 13 cents, 127% higher than a year ago. 

As I stated in September, when its international ARPU gets to $1, you can be sure it will be making money on a non-GAAP basis. Now, I believe if it gets to a dollar in revenue per user, it will also be making money on a GAAP basis.

At the time, I stated that if you were holding for 3-5 years, a share price under $30 made it a buy. Nothing in its third-quarter results changed my mind. 

At $20, a three- to five-year horizon should make you money. 

The Experiential World

It’s been several years since the consumer went from wanting stuff to wanting experiences. No longer is it enough to have that Louis Vuitton purse, you’ve got to have the luxury experience to go along with it. 

One thing about Pinterest that creeps me out is the number of people who comment that I have good taste on my Pinterest boards — I like single malt scotch and other fine liquor, tiny houses and a few other weird things like corporate memorabilia — because my wife will tell you otherwise, especially when it comes to clothing and style. 

But I digress.

As InvestorPlace’s Luke Lango recently wrote, Pinterest has become the go-to social media platform for actionable ideas for all kinds of different projects including remodeling your kitchen.

“Say you want to remodel your kitchen, and are looking for design ideas. You could use Google, but it’ll give you cluttered results. Facebook (NASDAQ:FB) and Twitter (NYSE:TWTR) won’t be much help. Instagram will offer you some kitchen photos, mixed in with a bunch of other unrelated photos,” Lango wrote Oct. 29. 

“Pinterest, though, will offer you a curated, digital showroom of ideas on how to remodel your kitchen. It also provides ideas on new clothing, vacations, recipes, etc. Pinterest is the best option for consumers to get visual inspirations for designs and projects.”

As far as I can tell, Pinterest ought to be able to leverage this with advertisers far better than many of the other alternatives including Facebook and Twitter, which suggests the sky’s the limit for its growth potential.

I just hope it doesn’t become a pick-up site because I can’t be the only one who thinks it’s weird when someone takes time out of their day to say you have good taste.  

The Bottom Line on PINS Stock  

I thought it was a buy below $30. Now it’s at $20.

If you can hold for 3-5 years, I don’t see a problem buying some now, leaving cash in reserve to buy some more if it drops into the mid-to-high teens. 

For me, Pinterest’s pathway to profitability isn’t if, but when. 

At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.