The Social media platform Pinterest was founded in 2003 and it went public in April 2019. It began its first day of trading up 25% at $23.75. The platform allows users to “pin” posts to digital “boards” on topics of interest. Pinterest (NYSE: PINS) stock has a market capitalisation of US$52 billion and the company's price-to-book ratio stands at 23.7%. Recently, the stock climbed to fresh all-time highs after blowout Q4 financial results.
Fundamental Analysis of PINS
Pinterest has beat expectations on the last three earnings reports. On February 4th Pinterest released the Q4 financial results. The results showed revenue growth accelerating, with 76% year-on-year growth in the fourth quarter to $706 million. The number of monthly active users jumped to 459 million vs. 449.4 million expected.
Earnings per share (EPS) $0.43 vs. $0.32 expected
Revenue $706 Million vs. $645.6 Million expected
“We welcomed over 100 million additional monthly active users to Pinterest in 2020, more than any other year in our history, and now we reach more than 450 million monthly active users around the world.” Pinterest CEO, Ben Silbermann said.
Should you buy the Pinterest stock now?
The investors and traders are certainly impressed with the progress Pinterest stock has made over the last year. Since going public at $19 per share, PINS has risen more than 200%. Technically the overall momentum remained bullish for the $PINS throughout this year and the stock is up 32% so far in 2021. In the long term, watch for monthly closing above $90 or below $70 area, that will give a larger confirmation of direction in the long term.
Facebook vs Pinterest
Facebook is much larger, and Pinterest may never reach that scale, but the comparison shows the potential. Most importantly the active user’s growth and lack of controversy are helping the Pinterest stock to continue the upside momentum. As per the last quarter results, Facebook’s monthly active users are up 14% versus 37% for Pinterest. Recently, the Facebook stock performance also faced some controversy problems including Apple's privacy change, the Democrats' Senate takeover and Trump's suspension.
Though the Pinterest stock has demonstrated good financial results, and user’s growth it also faces competition from other social media companies like Snap, Facebook, and Twitter. Competition is one of the many factors that can affect a company’s stock performance.
If Pinterest can continue to find new and improved ways to monetize its user base, this will go a long way towards helping the company’s future profitability. On the other hand, if the company is able to provide more positive earnings reports will also help to boost investor confidence and increase the upside momentum.
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