Why It’s Hard to Beat Pinterest Stock as a Social Media Play

Pinterest (NYSE:PINS) is having one of the best years on Wall Street. Pinterest stock is up more than 260% year-to-date, as the social media company has managed to avoid messy controversies that affect other social media stocks.

the pinterest (PINS) logo on a mobile phone held by a woman
Source: Nopparat Khokthong / Shutterstock.com

And there’s good news for Pinterest shareholders: there’s growing sentiment that the San Francisco-based social media stock will have a great 2021, as well.

Currently, Pinterest stock has an “A” rating in my Portfolio Grader, where it carries a strong buy recommendation. And that’s actually an improvement from the last time I wrote about Pinterest, roughly a month ago.

That said, let’s take a closer look and see why PINS stock is one of the best social media stocks you can buy these days.

What Is Pinterest?

If you’re not savvy in the ways of the Internet, Pinterest may not be on your radar.

Pinterest is a place where people can create online pinboards to post items of their interest. They could be anything from recipes, cool photos, fashion, or even animated GIFs or videos.

The platform launched in 2010 and didn’t go public until last year, with a stock price of $19 and a valuation of $12 million.

Less than two years later, Pinterest stock trades at more than $67. And the company boasts a market capitalization of more than $41 billion, making it one of the most successful IPOs in recent months.

Pinterest Earnings Are Solid

Moreover, third-quarter earnings fed into the bullish thesis. Pinterest recorded revenue of $442.6 million, which was better than analysts’ expectations of $383 million. Also, earnings per share (EPS) came in at 13 cents, which was better than the EPS of 4 cents that analysts had targeted.

One of the more surprising aspects of the earnings report was how Apple (NASDAQ:AAPL) products directly affect Pinterest stock. For instance, Pinterest registered an increase of 4 million monthly active users when Apple released its iOS 14 update — apparently, iPhone users were flocking to Pinterest to create and browse customized digital wallpaper backgrounds.

Pinterest management issued guidance for fourth-quarter revenue growth of 60% from last year. If it can hit that aggressive number and reach $640 million in revenue this quarter, it would imply that PINS stock growth is accelerating, not slowing. Notably, Pinterest is also expected to turn a profit for the full year.

That upward trend has gotten the attention of several analysts who are predicting good things ahead for Pinterest stock.

Bullish Expectations for Pinterest Stock

It wouldn’t be surprising for investors to wonder if Pinterest is fully valued now. After all, this is a company that surprised analysts when its earnings were in the black in the third quarter. And a 260% year-to-date gain could leave some to wonder if its time to take profits and move on.

But if you look toward to the experts, you find plenty of bullish sentiment for Pinterest stock:

  • MKM Partners recently gave PINS a “buy” rating and set at $66 price target.
  • JPMorgan set its price target at $75, labeling Pinterest stock as “overweight.”
  • Pivotal Research Group also set a $75 price target, giving PINS a “buy” rating.
  • Argus analyst John Staszak went one better, upgrading Pinterest stock from “hold” to “buy” and set a price target at $80.

An ‘Advertiser’s Dream’

Social media companies have seen tremendous growth in the last few years, but they’re also under huge pressure. President Donald Trump has a love/hate relationship with social media — he uses it to spread his message, but also criticizes it often when platforms fact-check his claims.

The politicization of social media is a threat to the platforms bottom line as advertisers choose to step back.

However, this is where Pinterest stands out because Pinterest has been relatively immune to the controversy and divisive politics. In fact, Pinterest has been called an “advertiser’s dream” by the Motley Fool’s Daniel Sparks.

“If you just intuitively think about Pinterest, it’s really an advertiser’s dream, because people are there. Probably, I don’t know, my wife, at least, I see her using Pinterest, like getting ideas on shopping simultaneously. I think that a lot of people use it that way because you can literally click on it and then go buy it. It’s really an advertiser has a captive audience who’s ready to spend money. Because a lot of times, they come there to get ideas on how to decorate something or whatever.”

The Bottom Line on Pinterest Stock

Pinterest has successfully created what could be the perfect social media brand. It’s a place where people get ideas an inspiration, rather than a place where people argue and divide.

Therefore, it’s no surprise that Pinterest had a great 2020. And it’s no surprise to see that there’s plenty of bullish momentum for Pinterest stock heading into 2021.

Thus, keep an eye on the company’s revenue numbers and monthly average users when Pinterest reports Q4 earnings early next year.

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.


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