Already up more than 200% so far this year, Pinterest (NYSE:PINS) stock is already one of the biggest winners of 2020.
The social media company has managed to avoid political quagmires that embroiled other social media companies. Advertising is bouncing back after a downturn caused by the novel coronavirus.
Covid-19 cases rose to new highs in the U.S. in recent days. But Pinterest seems somewhat immune to the negative effects. PINS stock is showing that it’s a safe space for those wishing to invest in social media stocks.
Here’s a closer look at Pinterest, which is coming off a big third-quarter earnings report.
PINS Stock at a Glance
Wall Street is certainly happy with this one. Third- quarter revenue come in at $442.6 million. That easily topped analysts’ expectations for $383 million. Adjusted earnings were 13 cents per share, which also beat predictions for earnings-per-share of 4 cents.
A year ago, Pinterest reported $280 million revenue in the third quarter. So, the growth this year despite the effects of the Covid-19 pandemic is impressive. President and CEO Ben Silbermann said the company is seeing strong international growth too.
The company has some unique features that helps it increase user engagement. For instance, when Apple (NASDAQ:AAPL) released its iOS 14 update, Pinterest saw an increase of 4 million monthly active users. Younger users in particular used the Pinterest platform to create customized digital wallpaper backgrounds.
Chief Financial Officer Todd Morgenfeld told analysts that the company also had strong support from advertisers in the third quarter:
“The macro environment is very supportive in Q3. Advertising demand improved overall, and we saw both brand advertisers and large retailers that have paused spend in Q2 return to our platform. We also saw continued strength in the conversion-oriented small- and medium-sized advertisers who gravitated to Pinterest in Q2 because of the native commercial intent of our users and because of the ongoing secular shift toward e-commerce that has been accelerated by the COVID crisis. Our sales team was able to lean into these favorable conditions in Q3, helping to introduce advertisers to new tools and features and operating with high efficiency overall.”
Looking Ahead to the Next Quarter
Pinterest executives express some caution about the fourth quarter. They cite uncertainties with the U.S. presidential election and the rising number of Covid-19 cases sweeping the country.
If the election is contested, it may take several days — or even weeks — for a winner to be declared. Remember, Covid-19 cases reached 9.2 million in the U.S. with more than 231,000 deaths. Many experts believe we have a difficult winter ahead that could impact the economy.
There are others on Wall Street, however, who have a more optimistic view.
Morgan Stanley says that bullish advertising trends are likely to continue for PINS stock during what’s expected to be a “shelter-in holiday.” Marketers and retailers are expected to experiment with digital advertising to reach customers. That should help Pinterest, the analysts say.
Andrew Lipsman, principal analyst at eMarketer, says Pinterest is “especially well positioned for the moment.” People use Pinterest for inspiration while stuck at home during the pandemic.
No Politics Here
Perhaps one of the best things about Pinterest, however, is that its largely seen as neutral ground among social media companies. Some executives are being hauled in front of Congress to answer pointed questions or face advertising boycotts. Meanwhile, Pinterest is safely neutral.
Other platforms are a place where people argue about politics or conspiracies in our increasingly divided society. Pinterest is seen as a place where people can be inspired or be creative.
That brand can’t be overlooked these days. It’s extremely appealing.
The Bottom Line
Pinterest has really come into its own this year, rising dramatically as the stock market dipped and dove during the pandemic.
Even with some political and pandemic headwinds ahead for the country, PINS stock appears to be in a solid position. Look for it to build on its 2020 gains.
PINS stock has a ‘B’ rating in my Portfolio Grader, where it has a buy recommendation.
On the date of publication, Louis Navellier did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article had a long position in AAPL. The InvestorPlace Research Staff member did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation.
