Value Seekers Can Pin Their Hopes on Beaten-Down Pinterest

Last year, Pinterest (NYSE:PINS) was a darling of the financial markets. It seemed as if everybody and his uncle wanted to buy PINS stock and the share-price rally was relentless.

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Presumably, this occurred because of the Covid-19 pandemic lockdowns. As people were stuck at home, they turned to social-media platforms like Pinterest to relieve their boredom and connect with others.

Of course, things have changed over the past year. Covid-19 vaccines are widely available, and PINS stock has lost its mojo in recent months.

There’s no guarantee that Pinterest’s investors will get a year-end rally. However, patient shareholders can take comfort in Pinterest’s impressive revenue growth, as well as the company’s commitment to innovation.

A Closer Look at PINS Stock

It’s amazing to consider just how far PINS stock rallied in 2020. From roughly $12 in March of 2020, the stock ascended to a resistance level of around $85 in February and April of 2021.

Unfortunately, it was all downhill from there. In hindsight, it’s evident that Pinterest’s shareholders should have taken profits after enjoying gains in the hundreds of percentage points.

Yet, as they say, hindsight is always 20/20. Starting in mid-April, PINS stock punished its owners by declining sharply, although there were mini-rallies along the way. Still, the overall trend has been to the downside, with the share price settling at $38 and change on Dec. 1.

Some folks might claim that even here, the stock is still pricey. Granted, Pinterest’s trailing-12-month price-to-earnings ratio is 73.71, which is rather high however, that’s only one piece of financial information, though. So, let’s delve deeper into Pinterest’s fundamental facts now.

No Explosive Results

There’s really nothing objectionable about Pinterest’s recently reported third-quarter 2021 fiscal results. Nevertheless, the critics will still find a sticking point if they look hard enough.

Take the company’s global monthly active user count, which totaled 444 million. That’s a whole lot of active users, but it only represented 1% year-over-year growth.

This isn’t the worst possible outcome, but it might have disappointed folks who remembered Pinterest’s explosive results from 2020.

Still, Pinterest CEO and co-founder Ben Silbermann found a reason to celebrate his company’s third-quarter performance.

“Revenue grew 43% year-over-year and I am proud of the team’s progress in launching a number of new products for both creators and brands, bringing more video content and shoppable features to Pinterest,” Silbermann declared.

We’ll touch upon those products/features in a moment. For now, we should observe that Pinterest is making financial progress in certain key areas.

For example, during 2021’s third quarter, the company increased its non-GAAP net income by 119% year-over-year, to $190,549,000.

Furthermore, Pinterest increased its adjusted EBIDTA by 117% year-over-year, to $93,042,000. Those figures might or might not be explosive – I’ll let you decide for yourself.

New and Exciting Experiences

I promised to address the topic of how Pinterest is continuing to innovate with its social-media platform. Not long ago, the company announced that Pinterest is introducing new Pinner products and experiences globally. Both content creators and users should enjoy these new products/features.

First, there’s a redesigned home feed to offer Pinners the option to “browse” or “watch” when looking for inspiration and ideas.

The “watch” tab is particularly intriguing, as it enables the users to scroll through and engage with fresh content from creators. Next up is the “takes” feature. This allows Pinterest’s users to instantly publish an idea (or “Idea Pin”), and Pinners’ responses will link back to the creators’ original Idea Pins.

Also, Pinterest is rolling out its first-ever in-product monetization program for creators, known as “Creators Rewards.” Through this program, Pinterest is providing micro-grants for projects that creators are passionate about.

Plus, Pinterest is making “Idea Pins more shoppable, now integrating them with AR Try on, its augmented reality beauty try on.”

Along with all of that, Pinterest is introducing “Create Your Take,” in which celebrities like Jennifer Lopez, Megan Thee Stallion and Storm Reid can share ideas with the Pinterest community.

The Bottom Line

As you can see, Pinterest is evolving and providing enhanced experiences for its users.

Meanwhile, PINS stock is languishing in 2021. This might be due to a letdown compared to last year’s stellar performance. There’s no way to know exactly when, or even if, Pinterest will be a darling of the financial markets again.

For the time being, investors can consider a small position in the stock as Pinterest’s Wall Street comeback could be right around the corner.

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 Publishing Guidelines.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets. 

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