Pinterest (NYSE:PINS) made the most of the pandemic. A social media website that allows users to discover new products, PINS stock hit the lifetime high of $89 in February 2021 and is currently trading around $78.
The pandemic took a toll on several industries but social media was not one of them.
Due to the lockdown, people were forced to stay indoors and being on social media the one of the few ways people chose to kill time. It kept everyone connected during social distancing.
I am bullish on the stock and believe it has new highs in store. With that in mind, let’s look at the two factors that will drive growth for PINS stock.
A Closer Look at PINS Stock
Pinterest is not about sharing personal information but providing inspiration. The content on the platform is based on products, ideas, and hobbies. It set itself apart from other social media websites with this approach.
As people spent more time indoors, PINS stock surged in the number of users enabling it to attract more and larger advertizers.
The revenue in Q4 stood at $706 million and the net income stood at $207.8 million which is a dramatic increase from the net loss of $35.7 million the previous year.
The company’s active user base increased by 37% year-over-year in Q4 2020 and hit 459 million. The average revenue per user increased by a whopping 49% year-over-year.
Pinterest has ample room to grow and increase its user base. What is interesting to note is that the company has high liquidity.
Pinterest holds cash and equivalents of $669 million. This provides it an edge in the industry and allows the company to innovate and adapt. The revenue growth is due to solid investments in new technologies.
Pinterest will be able to handle the pandemic but will also be able to make innovative discoveries and additions to the website that can help attract users.
With adequate funds on hand, Pinterest has nothing to worry about. The assets far surpass its liabilities and the company can make strong moves in the international market.
Pinterest and Shopify
Pinterest has nailed the partnership with Shopify (NYSE:SHOP) and is giving users much more than inspiration. With the “shoppable” content on the platform, advertisers are keen to catch the attention of the users.
The partnership gives Pinterest access to more than 1 million merchants on Shopify and will drive revenue in the long term.
The more time people spend on Pinterest, the higher the revenue. PINS stock is well-positioned in the industry, and the stock is only going higher.
All in all, Pinterest had a great quarter in terms of growth, revenue and momentum. The fundamentals have never been stronger and the company has tremendous potential to grow in 2021.
The Bottom Line on PINS stock
Pinterest is a solid social media stock to buy. Despite the pandemic, the company could generate stellar results in 2020 and the momentum will continue in 2021.
Pinterest expects revenue growth of more than 70% year-over-year, which will put the company at the top of the social media industry.
The company has ample room to grow and a large international market to explore. With more shoppable content, users will not only be looking at images but they will also be taking action over it.
The management is making the right moves towards technology innovation and expansion. The current dip in the stock is an opportunity to buy. PINS stock is a must-have in your portfolio.
On the date of publication, Vandita Jadeja did not have (either directly or indirectly) any positions in the securities mentioned in this article.
