- Pinterest (PINS) stock captured people’s attention during the onset of Covid-19.
- However, two years have passed and Pinterest hasn’t demonstrated enough growth in key areas.
- Investors should be cautious and consider other investments than Pinterest stock now.
San Francisco-headquartered Pinterest (NYSE:PINS) stock is a visual discovery platform that became quite popular after the onset of the Covid-19 pandemic. Social media is certainly still relevant in 2022, but that doesn’t mean traders should jump into PINS stock.
The circumstances have changed over the past two years. What was a wise investment in March of 2020, isn’t necessarily a value-added asset today.
To borrow a phrase from InvestorPlace contributor Joel Baglole, the “worst might not be over” for Pinterest investors. In the final analysis — and after perusing through the company’s essential stats — it’s going to be awfully difficult to generate interest in Pinterest.
| PINS | $25.90 |
What’s Happening with PINS Stock?
During the onset of the Covid-19 pandemic, some people were on lockdown and Pinterest helped them to relieve their boredom and anxiety. Consequently, PINS stock rocketed from roughly $12 in March 2020 to around $85 in February 2021.
The stock revisited the $85 area again in April 2021 before embarking on a prolonged decline. It hasn’t been a complete round trip yet, but the Pinterest share price has already fallen to the $25 level.
In other words, a complete round trip to pre-pandemic levels could involve PINS stock getting cut in half again. The prospect of a possible 50% drawdown is the last thing any investor needs now.
If you’re going to go bottom-fishing with a distressed asset, you’ll need a compelling reason to do so. Otherwise, you’d only be ignoring the essential principle of “the trend is your friend” (or enemy, in a downtrend).
This is particularly true as rising inflation could threaten the economy. Does Pinterest have the fiscal stats to thrive in this challenging macro environment?
Faltering Figures
To put it bluntly, Pinterest is having significant issues due to the platform’s declining user base. As it is with other social media platforms, the user base is Pinterest’s lifeblood.
Some of Pinterest’s perma-bulls may have cited the company’s fourth-quarter and full-year 2021 financial report as evidence that Pinterest is on the right track. Does the evidence support this view, though?Not really, to be perfectly honest.
During Q4 2021, Pinterest’s global monthly active users (MAUs) decreased 6% year-over-year. Also during that time frame, Pinterest observed MAU losses both in the U.S. and internationally.
Piggybacking on that thought, InvestorPlace contributor Alex Sirois also made a great point, noting, “the worst news is that the U.S. MAU figures led the way. Monthly average user counts declined 12% throughout 2021 and 12% during the fourth quarter.”
Is it possible that the catalysts that made Pinterest such a big hit in 2020, aren’t there in 2022? This is a question that any prospective PINS stock buyer should seriously ponder.
Finally, we should point out that in Q4 2021, Pinterest’s net income declined 16% year-over-year. This further weakens the idea that Pinterest’s most recently reported fiscal results are fodder for the bull case.
What You Can Do Now
There’s no need to commit the fiscal sin of going against the long-term trend in PINS stock.
Plus, you don’t have to buy into the idea that Pinterest is just as financially strong now as it was two years ago.
As the times and circumstances change, your investment strategy should, as well. Therefore, with the Covid-19 catalysts now firmly in the past and the data indicating user-base attrition, it’s not a wise choice to invest in Pinterest today.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
