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Pinterest (PINS) Up 48% in a Year: Should You Ride the Wave?
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Buoyed by a holistic growth model, Pinterest, Inc. (PINS - Free Report) has surged 47.9% over the past year compared with the industry’s growth of 21.5%. It has outperformed its peers like Snap Inc. (SNAP - Free Report) but lagged Meta Platforms, Inc. (META - Free Report) over this period.
Driven by greater engagement on the platform from its existing users (called Pinners), Pinterest has created a niche in the digital market platform. It differs from other social media platforms and popular digital advertising channels that typically offer advertisers an audience that already knows what they want.
Pinterest caters to discovery. People turn to the platform to get more information on various subjects like weddings, fashion, or fitness but are not necessarily looking for a specific item. They are there to discover or be inspired, which presents an appealing opportunity to advertisers, as Pinners are often very open to purchasing.
Image Source: Zacks Investment Research
What Lies Behind This Upsurge
Pinterest is increasingly establishing a unique value proposition to advertisers that could provide a competitive advantage in the long haul. Through various innovations, it continues to dramatically improve the advertising platform, which presently appears to be one of the best ad platforms for consumer discretionary brands looking for new ways to reach customers and stretch smaller ad budgets. Pinterest’s Verified Merchants Program allows brands to create a catalog of shoppable products on the app and use special re-targeting capabilities in their ads.
In addition, Pinterest is taking various initiatives to bring more actionable content on the platform from a wide range of sources such as users, creators, publishers and retailers. This has resulted in a solid improvement in engagement metrics like sessions, impressions and saves across all regions. Healthy traction in emerging verticals like men’s fashion, auto, health and travel are tailwinds.
Rising engagement among Gen Z users is a positive factor as well. Management's decision to increase the accessibility of mobile deep linking (MDL) products to more advertisers has improved shoppability on the platform. The MDL solution is well-suited for retailers who are aiming to drive more purchases through their mobile app. This has significantly boosted shopping ads revenue generation.
Focus on AI Models
The company’s focus on improving operational rigor and incorporation of sophisticated AI models to enhance relevancy and personalization is likely to bring long-term benefits. Pinterest is also emphasizing building new ad tools and formats to help grow the scope of monetization on the platform. This will enable advertisers to measure the results and conversion rates, which will improve their decision-making. The company has partnered with Amazon.com, Inc. (AMZN - Free Report) to further capitalize on the commercial intent of its user base and increase shoppability on its platform.
The acquisition of the AI-powered, high-tech fashion-shopping platform, The Yes, has enabled it to create a strategic organization to help steer the evolution of its features and merchants. Pinterest and The Yes share a common vision of making it easy for customers to find products matching their tastes and styles. The combined company has been making continuous efforts to absorb creators publishing videos and live streams to make the shopping experience swift and easy for customers.
Margin Woes Persist
Pinterest expects operating expenses to increase substantially in the near term for expanding operations domestically and internationally, enhancing product offerings, broadening Pinner and advertiser base, expanding marketing channels, hiring additional employees and developing technology. In addition, Pinterest faces significant competition from larger, more established companies such as Amazon, Facebook (including Instagram), Google, Snap and Twitter, which provide their users with a variety of online products, services, content (including video) and advertising offerings, including web search engines, social networks and other means of discovering, using or acquiring goods and services.
The company also faces competition from smaller firms, including Allrecipes, Houzz and Tastemade, that offer users engaging content and commerce opportunities through similar technology, products and features or services.
Estimate Revision Trend
Earnings estimates for PINS for 2024 have moved up 43.1% to $1.46 over the past year, while the same for 2025 has increased 51.7% to $1.76. The positive estimate revision portrays optimism about the stock’s growth potential.
Image Source: Zacks Investment Research
PINS Trading Below 50-Day Moving Average
Pinterest is currently trading just below the 50-day moving average.
Image Source: Zacks Investment Research
End Note
Pinterest is witnessing solid net sales growth backed by strong user engagement across all regions. Enhancements in lower funnel solutions like MDL, shopping ads and API for conversions are providing a sustained return on investment to advertisers. Through third-party ad integration with Google, Pinterest aims to introduce monetization opportunities in several unmonetized international markets. The uptrend in estimate revisions further oozes confidence and long-term investors already owning the stock could stay put.
However, increasing competition from other video-centric consumer apps is likely to adversely impact user engagement to some extent. High operating expenses to expand operations and incorporate the latest technological innovations are expected to dent its profitability. With a Zacks Rank #3 (Hold), Pinterest appears to be treading in the middle of the road, and investors could be better off if they trade with caution. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Pinterest (PINS) Up 48% in a Year: Should You Ride the Wave?
Buoyed by a holistic growth model, Pinterest, Inc. (PINS - Free Report) has surged 47.9% over the past year compared with the industry’s growth of 21.5%. It has outperformed its peers like Snap Inc. (SNAP - Free Report) but lagged Meta Platforms, Inc. (META - Free Report) over this period.
Driven by greater engagement on the platform from its existing users (called Pinners), Pinterest has created a niche in the digital market platform. It differs from other social media platforms and popular digital advertising channels that typically offer advertisers an audience that already knows what they want.
Pinterest caters to discovery. People turn to the platform to get more information on various subjects like weddings, fashion, or fitness but are not necessarily looking for a specific item. They are there to discover or be inspired, which presents an appealing opportunity to advertisers, as Pinners are often very open to purchasing.
Image Source: Zacks Investment Research
What Lies Behind This Upsurge
Pinterest is increasingly establishing a unique value proposition to advertisers that could provide a competitive advantage in the long haul. Through various innovations, it continues to dramatically improve the advertising platform, which presently appears to be one of the best ad platforms for consumer discretionary brands looking for new ways to reach customers and stretch smaller ad budgets. Pinterest’s Verified Merchants Program allows brands to create a catalog of shoppable products on the app and use special re-targeting capabilities in their ads.
In addition, Pinterest is taking various initiatives to bring more actionable content on the platform from a wide range of sources such as users, creators, publishers and retailers. This has resulted in a solid improvement in engagement metrics like sessions, impressions and saves across all regions. Healthy traction in emerging verticals like men’s fashion, auto, health and travel are tailwinds.
Rising engagement among Gen Z users is a positive factor as well. Management's decision to increase the accessibility of mobile deep linking (MDL) products to more advertisers has improved shoppability on the platform. The MDL solution is well-suited for retailers who are aiming to drive more purchases through their mobile app. This has significantly boosted shopping ads revenue generation.
Focus on AI Models
The company’s focus on improving operational rigor and incorporation of sophisticated AI models to enhance relevancy and personalization is likely to bring long-term benefits. Pinterest is also emphasizing building new ad tools and formats to help grow the scope of monetization on the platform. This will enable advertisers to measure the results and conversion rates, which will improve their decision-making. The company has partnered with Amazon.com, Inc. (AMZN - Free Report) to further capitalize on the commercial intent of its user base and increase shoppability on its platform.
The acquisition of the AI-powered, high-tech fashion-shopping platform, The Yes, has enabled it to create a strategic organization to help steer the evolution of its features and merchants. Pinterest and The Yes share a common vision of making it easy for customers to find products matching their tastes and styles. The combined company has been making continuous efforts to absorb creators publishing videos and live streams to make the shopping experience swift and easy for customers.
Margin Woes Persist
Pinterest expects operating expenses to increase substantially in the near term for expanding operations domestically and internationally, enhancing product offerings, broadening Pinner and advertiser base, expanding marketing channels, hiring additional employees and developing technology. In addition, Pinterest faces significant competition from larger, more established companies such as Amazon, Facebook (including Instagram), Google, Snap and Twitter, which provide their users with a variety of online products, services, content (including video) and advertising offerings, including web search engines, social networks and other means of discovering, using or acquiring goods and services.
The company also faces competition from smaller firms, including Allrecipes, Houzz and Tastemade, that offer users engaging content and commerce opportunities through similar technology, products and features or services.
Estimate Revision Trend
Earnings estimates for PINS for 2024 have moved up 43.1% to $1.46 over the past year, while the same for 2025 has increased 51.7% to $1.76. The positive estimate revision portrays optimism about the stock’s growth potential.
Image Source: Zacks Investment Research
PINS Trading Below 50-Day Moving Average
Pinterest is currently trading just below the 50-day moving average.
Image Source: Zacks Investment Research
End Note
Pinterest is witnessing solid net sales growth backed by strong user engagement across all regions. Enhancements in lower funnel solutions like MDL, shopping ads and API for conversions are providing a sustained return on investment to advertisers. Through third-party ad integration with Google, Pinterest aims to introduce monetization opportunities in several unmonetized international markets. The uptrend in estimate revisions further oozes confidence and long-term investors already owning the stock could stay put.
However, increasing competition from other video-centric consumer apps is likely to adversely impact user engagement to some extent. High operating expenses to expand operations and incorporate the latest technological innovations are expected to dent its profitability. With a Zacks Rank #3 (Hold), Pinterest appears to be treading in the middle of the road, and investors could be better off if they trade with caution. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.