In the initial stages of the Covid-19 pandemic, many people spent more time indoors and on social media. That boosted interest in Pinterest (NYSE:PINS) and sent PINS stock soaring in 2020.

It’s funny how fickle the market can be, though. Shockingly, Pinterest went from darling to despised in 2021 as its share price was practically cut in half.

As we’ll see, an old-school valuation metric will show that PINS stock isn’t necessarily a bargain yet. However, as its share price deflates like a punctured tire, the stock is becoming harder for value hunters to resist.

Meanwhile, one fund is pinning its hopes on Pinterest’s international expansion prospects. Just maybe we’ll find data indicating that Pinterest’s shares are underpriced and poised for a comeback.

A Closer Look at PINS Stock

It’s easy to see why some value investors might say that PINS stock went too high, too quickly last year.

Amazingly, the stock rocketed from roughly $12 in March 2020 to a resistance level of around $85 in February and April of 2021.

Concerns about the valuation of the stock, which closed yesterday at $36.93,  are still understandable. But we might wonder what effect the stock’s decline may have had on Pinterest’s valuation.

As it turns out, Pinterest’s trailing 12-month price-earnings ratio is down to 71.62. This old-fashioned metric reveals that PINS stock isn’t very cheap. But it’s not outrageously overpriced, either.

Bear in mind that we’re living in a time when some of the market’s high flyers have triple-digit P/E ratios.

So Pinterest’s transition from “momo” (momentum) to value play should make the stock more attractive to bargain hunters.

Some Not-So-Bad News

Sometimes it can be worthwhile to see how big-money funds feel about a stock that’s on your watch list.

In a letter to its investors, Baron Opportunity Fund discussed its stance on Pinterest. Apparently, Baron had a mixed view of Pinterest.

First, the fund mentioned Pinterest’s “disappointing monthly active user engagement metrics.” Was the data really that bad, though?

If “flat” means the same thing as “disappointing,” then Baron has a valid point. In the third quarter, Pinterest’s global monthly active user count increased by only 1% year-over-year.

Some folks might actually choose to see the glass as half-full. After all, it appears that people are still using Pinterest despite the easing of Covid-19 restrictions.

Envisioning a Runway

Along with Pinterest’s supposedly “disappointing” user growth,  Baron cited Pinterest’s strong Q3 financial performance.

Notably, Pinterest reported 43% year-over-year global revenue growth as well as an EBITDA margin, excluding some items, of 32%.

Moreover, the fund noted Pinterest’s pivot to a new video-based engagement model, known as Idea Pins.

With a rather colorful choice of phrases, Baron suggested that the transition to Idea Pins, which has not yet been monetized, “may cannibalize some monetized engagement in the near term, thus penalizing short-term revenues.”

That’s fair, since Pinterest is taking a risk by not yet generating revenue through Idea Pins.

Cannibalism aside, Baron is “encouraged by the long runway for growth as Pinterest improves its platform and expands internationally.”

The company itself also seems to envision a runway, as Pinterest has guided for its revenue to “grow in the high teens percentage range year over year” this quarter.

The Bottom Line

It might feel counterintuitive to think of PINS stock as a value play. Yet it’s undeniable that the stock has fallen far below its peak price.

Plus, Pinterest’s lack of substantial user growth is offset by the company’s ability to generate strong revenue.

At the end of the day, it might be challenging to think of Pinterest as a bargain. Nonetheless, some of its data points suggest that its decline has created a prime buying opportunity for contrarian investors.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.