I’ve been emphatically bullish on Pinterest (NYSE:PINS) stock all year long. See here, here, here, and here.

The ride thus far has been enormously profitable. PINS stock is up 110% year-to-date, including a 320% surge from its coronavirus lows in March.

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While I still love Pinterest as a long-term investment opportunity — the company is serving a unique and valuable visual discovery niche in the social media space, with an ad business that is primed for huge growth over the next few years — I also believe that Pinterest stock is maxed out in the near-term.

That is, up at $40, Pinterest stock is fully valued, and subject to weakness.

As such, it is with some sadness that I’m taking off the bullish hat on Pinterest stock, and shifting to a neutral stance until the valuation becomes more tangible in the near-term.

Here’s a deeper look.

Pinterest Stock is a Long-Term Winner

Although I’m shifting to a neutral near-term stance, I’d like to make one thing clear: I still view Pinterest stock as a long-term winner.

Pinterest is a platform consumers use with the intent to discover new products and services. It’s essentially an online catalog of experiences, brands, products and services — which gives it an entirely differentiated value prop from other social media platforms, the sum of which are used almost exclusively for entertainment and/or communication.

Because of this differentiated value prop, Pinterest is sticky. The user base won’t churn. Instead, the user base will only grow as product discovery and inspiration increasingly digitize.

Further, because this sticky user base is going to Pinterest with a discovery intent, ads on the Pinterest platform will be exceptionally effective, with high conversions and minimal disruption. Even further, Pinterest is doubling down on building out direct shopping opportunities on its platform, so Pinterest users can go from inspiration to discovery to purchase, all in one place.

Broadly, then, Pinterest is transforming into an end-to-end platform for the entire digital shopping process. As Pinterest continues on this transformation over the next 5 to 10 years, the company’s revenues and profits (and the Pinterest stock price) will all roar higher.

Valuation is Maxed Out

Although the long-term Pinterest growth narrative is promising, Pinterest stock is maxed out in the near-term thanks to its already full valuation.

My modeling suggests that — assuming Pinterest can add roughly 25 million new users per year over the next decade, grow ARPU rates to industry average levels and leverage economies of scale to expand profit margins to 30%-plus — this company will do about $3.50 in earnings per share by 2030, versus five cents projected this year.

Based on an interactive media sector-average 20-times forward earnings multiple, that implies a 2029 price target for Pinterest stock of $70.

So there’s huge upside potential in Pinterest stock over the long haul.

But that upside is mostly priced in today. If you discount that $70 price target back by 8.5% per year, you arrive at a 2020 price target for Pinterest stock of under $35.

So, up at $40, Pinterest stock will run into some near-term valuation friction.

Near-Term Challenges Cannot be Ignored

While it’s true that hyper-growth stocks can sustain premium valuations for long periods of time, such stocks are susceptible to huge pullbacks in the event a near-term risk emerges.

When it comes to Pinterest stock, there are ample near-term risks on the horizon.

Like the lack of a stimulus package impacting consumer spending, and providing a drag on rebounding ad spend. Or the prospect of renewed coronavirus-related shutdowns also inducing a slowdown in consumer and ad spending. Or Facebook‘s (NASDAQ:FB) newly launched Reels feature stealing some engagement time away from Pinterest.

I don’t think any of these risks are that meaningful, or will impact the long-term growth narrative at all. But, with the valuation as extended as it is today, these risks could lead to a sizable sell-off in Pinterest stock.

Bottom Line on Pinterest Stock

Pinterest stock is a long-term winner that has sprinted into near-term overvalued territory. So use the recent surge to do some profit-taking.

Don’t completely exit. You rarely want to completely exit a long-term winner like PINS. But do take some profits off the table, with a plan to roll those profits back into the stock on the next big dip.