After the initial public offering (IPO) stock surge, the stock traded downward in 2019, but not for long. It bounced back in 2020 from an all-time low of $10 in March to an all-time high of over $89 in early 2021. PINS stock currently sits at $81.80, which is a 300% increase year-over-year. But will the rally continue?
Let’s dig deeper into the three factors that will drive the stock higher.
Stellar Q4 Results
The recent surge in the stock came off the heels of stellar fourth quarter results. According to the report, the company generated revenue of $706 million, which is a 76% increase year-over-year, beating analyst estimates in earnings and revenue. The global monthly active users grew 37% year over year and hit 459 million. The company added more than 100 million monthly active users in 2020. Further, The international business of the company grew 145% year-over-year.
This is a clear sign that the social media company is moving towards the right direction of growth and user engagement. The company has managed to attract users throughout 2020 and will likely continue to do so in 2021. According to company guidance, Q1 revenue is expected to grow 70% year-over-year, which means PINS stock is only going upward.
The No-Controversy Background
Several social media companies including Facebook (NASDAQ:FB) and Twitter (NYSE:TWTR) were surrounded by controversy in 2020. Pinterest managed to escape 2020 unscathed, and even came out richer as a result. As brands started distancing themselves from Facebook and Twitter, they began moving towards Pinterest to start advertising campaigns.
Pinterest’s content provides a largely non-politicized, controversy-free space; perfect for advertisers escaping the shortcomings of the highly politicized Facebook and Twitter.
Moreover, because of the pandemic, brands realized that more and more people are using Pinterest to look for inspiration while they are locked in their homes. Because of this, the company should continue to attract more ads and generate higher revenue in 2021.
Pandemic-Related Surge in Active Users
The pandemic may have slowed economic growth and business revenue for companies but it did the opposite for Pinterest. People used Pinterest more than ever to look for products and ideas. It can be seen in the number of active users reported in Q4 results. Whether it is home decoration ideas, manifestation journals, or bread baking, users are looking for inspiration on Pinterest. The company saw a 36% growth in Millennial usage of the platform since the pandemic started.
With movement restrictions still in place and lockdown across many regions, Pinterest is only soaring in popularity and user base. For the next few months, it will remain an integral tool for planning and inspiration purposes. There is a high level of uncertainty on when the world will return to normal and this will work positively for the company’s growth.
Bottom Line on PINS Stock
Pinterest stock is on a tear, and I believe it will cross the $100 mark very soon. If the impact of the pandemic continues this year, the company will report impressive revenue and growth. Despite the strong competition in the industry, Pinterest has managed to gain user attention.
Considering the strong fundamentals and short-term outlook of the company, I can strongly say that Pinterest is here to stay and PINS stock is only going upwards.
On the date of publication, Vandita Jadeja did not have (either directly or indirectly) any positions in the securities mentioned in this article.