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PINTEREST

Pinterest Stock Looks Like A Solid Bet Following The Recent Pullback

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Pinterest stock (NYSE: PINS) is down by about 20% from its February highs, trading at levels of around $71 per share currently. This sell-off was driven by a correction in high-growth stocks over the last few weeks amid fears of rising inflation and higher bond yields. However, we think that Pinterest looks like a good buy at current levels. Here’s why.

Pinterest continues to add new users quickly and is getting a lot better at monetizing its base. Over Q4 2020, Pinterest’s active user base grew by 37% year-over-year to 459 million and ARPUs in the U.S. jumped 49% year-over-year, driven by more “shoppable” content and improving advertising capabilities. The company also has a lot of room to scale up globally as international markets represent just 17% of total revenue. Growth should remain strong post-Covid-19 as well, given the company’s unique position in the social media space. Content on Pinterest is focused on projects, hobbies, products, and ideas that are more directly related to buying things. In comparison, platforms such as Facebook are focused on sharing personal information.

Now, although Pinterest stock trades at a relatively high 18x projected 2021 revenues, the company should grow into this valuation quickly. Pinterest’s total revenues are projected to grow by over 48% in 2021 and by about 35% next year, per consensus estimates. Margins – although less of a concern for companies in growth mode – are getting better and Pinterest appears to be on track to becoming a highly profitable company. For perspective, Adjusted EBITDA margins jumped from 19% in Q4 2019 to a solid 42% in Q4 2020.

For more details on Pinterest’s historical performance, see our interactive dashboard Why Pinterest Stock Moved 4x since 2019

[2/8/2021] Overview Of Pinterest’s Q4 2020 Results

Pinterest (NYSE: PINS) had a solid 2020, with its stock rising by over 3x over the year, as the company was a big beneficiary of Covid-19 related stay-at-home orders, with people spending more time online. Now is the stock poised for further gains? It looks like it. Pinterest’s fundamentals are improving, with Q4 results coming in much stronger than expected. Revenue rose by about 76% year over year to $706 million and the monthly active user base grew by 37% year over year to 459 million. There’s still more room for growth. Pinterest’s audience is expanding beyond its core user base of women (who account for about 60% of users), with an increasing number of men, Gen Z, and Millennials embracing its platform. For example, in Q2 2020 the company reported that the number of men on Pinterest jumped nearly 50% year-over-year. The company has scope for growth in international markets, which represent just 17% of total revenue. Pinterest is also getting better at monetizing its users. Quarterly ARPUs in the U.S. jumped 49% year-over-year over Q4, and this should grow as the company focuses on more “shoppable” content and improves its ad capabilities. Despite the big run-up, Pinterest looks like a decent value.  Although the company’s price to sales multiple has increased to a relatively steep 22x projected 2021 revenues, it is growing fast. Sales grew by 48% last year and are projected to grow by around 38% in 2021, per consensus. In comparison, Snap (NYSE:SNAP) is projected to grow by about 40% this year and trades at about 27x projected Revenue.

For more details on Pinterest’s historical performance, see our interactive dashboard Why Pinterest Stock Moved 4.5x since 2019

[12/22/2020] How Is Pinterest Stock Doing?

Back in August, we outlined how the stock of social media company Pinterest (NYSE: PINS) could realistically double over the next 3 years. Turns out, the stock has significantly surpassed our expectations rising by over 2x over the last 5 months alone. So what’s driving the surge and could Pinterest be poised for further gains? Let’s delve a little deeper into Pinterest’s recent performance, current valuation, and outlook.

For more details on Pinterest’s historical performance, see our interactive dashboard Pinterest Stock Grew 3.5x Since 2019. Here’s How.

Social media players have been big beneficiaries of Covid-19 and related stay at home orders as people spend more time online. As of Q3 2020, Pinterest’s Monthly Active Users base soared 37% year over year to 442 million, with total Revenues growing by about 58% year over year to about $443 million. Moreover, we think Pinterest has barely scratched the surface in terms of monetization of its user base. ARPU stood at roughly $1 globally during Q3, versus over $7 for Facebook (NASDAQ:FB) Now the content on the Pinterest platform is focused on projects, hobbies, products, and ideas that are more directly related to buying things, compared to other platforms such as Facebook which are focused on sharing personal information. For example, users who are looking at home improvement or planning a wedding are likely to head to Pinterest. This should make the platform highly valuable to marketers, driving future revenue, and earnings growth.

While Pinterest’s Price to sales multiple has expanded to over 25x projected 2020 Revenues (from about 15x during our last update in August), this is justified by the company’s stronger than expected growth in recent quarters (Revenue is likely to grow at over 40% over 2020 and 2021) and the fact that it is on track to post a small profit this year. Pinterest is also fairly valued compared to Snap (NYSE:SNAP), another fast-growing social media company – which trades at about 32x projected 2020 Revenue and is likely to post similar levels of growth.

[Updated 8/14/2020] Pinterest Stock In 2023

Pinterest (NYSE: PINS), a social media website that helps users discover new products and ideas, has seen its stock price rise by about 2x this year, with its market cap standing at roughly $21 billion. The stock now trades at about 14.5x projected 2020 revenues, despite the fact that the company is likely to just about break-even this year. Does this make the stock expensive? Probably not, considering that revenues could grow by close to 2.5x by 2023 if the company continues to execute well, with Net Income (profits after all expenses and taxes) jumping considerably, generating strong returns for shareholders.

Pinterest’s Revenues could grow by roughly 2.5x from estimated levels of a little over $1.45 billion in 2020 to close to $3.5 billion by 2023, representing a growth rate of roughly 34% per year (for context annual growth was over 55% between 2017 and 2019). There are multiple trends that support this continued growth. Firstly, Pinterest’s user base is soaring, with its monthly active users (MAUs) rising 39% to 416 million over Q2 2020 as the Coronavirus pandemic pushed more people online. Moreover, Pinterest has barely scratched the surface in terms of monetization of its user base, with quarterly ARPU standing at $0.70 globally during Q2, versus over $7 for Facebook. [1] The content on the Pinterest platform is focused on products, hobbies, and ideas that are more directly related to buying things, compared to other platforms such as Facebook which are focused on sharing personal information. This makes Pinterest more attractive to advertisers. The company has also been improving its technology to drive monetization, launching new tools such as automatic bidding – which makes it easier for advertisers to manage campaigns, and effectively spend more while adding more new shopping-related features for users. Separately, Facebook – which currently dominates the social media landscape – has been facing mounting pressure on anti-trust and privacy-related issues, and this could likely help Pinterest win over more business from more socially-conscious advertisers.

While we expect Pinterest to just about break even this year, the company could see profits pick up from 2021 onward as its ad revenues pick up sharply post the Coronavirus, and as the company’s past investments in technology and product development start to pay off. While Facebook posted Net Margins (Net income as a percentage of Revenue)  of over 25% in the last fiscal year, the company is a dominant force in the ad markets, and it is probably not reasonable to expect similar margins of Pinterest. That being said, as Pinterest’s business gains scale, it should be able to boost margins to levels of around 15% by around 2023. Considering our revenue projections of roughly $3.5 billion and 15% margins, $525 million in Net Income is a real possibility by 2023.

Now if Pinterest’s Revenues expand by 2.5x, the P/S multiple will contract to roughly 0.4x its current level, assuming the stock price stays the same, correct? But that’s exactly what Pinterest investors are betting will not happen! If Revenues expand 2.5x over the next few years, instead of the P/S shrinking from around 14.5x presently to roughly 6x, a scenario where the P/S metric falls more modestly, perhaps to about 11x looks more likely. For context, the broader Internet sector traded at a forward P/S multiple of about 7x, while Facebook trades at roughly 9x. [2] It’s quite reasonable to assume that Pinterest will trade ahead of these companies considering that it’s likely earlier in the growth cycle, with a lot more scope for monetization. This would make growth in Pinterest stock price by about 80% a real possibility in the next three years, taking its market cap to over $38 billion ($3.5 billion in revenue at an 11x multiple). This would translate into a P/E multiple of about 73x based on our projected 2023 earnings for the company.

may have moved, 2020 has created many pricing discontinuities which can offer attractive trading opportunities. For example, you’ll be surprised how counter-intuitive the stock valuation is for Amazon vs Etsy. Another example is Apple vs Microsoft. nnBased on article theme, variations to “While may have moved” can be (a) While may be overvalued (or undervalued) (b) While can move (c) Although may not be attractive (d) While is worth considering”}”>While Pinterest stock may have moved a lot, 2020 has also created many pricing discontinuities that can offer attractive trading opportunities. For example, you’ll be surprised how counter-intuitive the stock valuation is for Amazon vs Etsy. Another example is Apple vs Microsoft.

See all Trefis Price Estimates and Download Trefis Data here

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PINTEREST

Better Buy: Facebook vs. Pinterest

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These two social media companies are competing for ad dollars.

According to eMarketer, 81% of internet users worldwide use social media each month. Notably, that figure is up from 78% in 2019 as a result of pandemic-driven digitization.

Not surprisingly, that trend has been a tailwind for social giants like Facebook (NASDAQ:FB) and challengers like Pinterest (NYSE:PINS). And given the enormity of the digital ad market, both of these tech companies should continue to grow in the years ahead.

But which stock is the better buy?

What we know about Facebook

Facebook operates several social media platforms, including Facebook, Instagram, Messenger, and WhatsApp. It generates the vast majority of its revenue through the sale of ad space across those platforms, as well as on third-party apps and websites.

A group of young people interacting with smartphones, while various icons (i.e. camera, email, shopping cart) are displayed above their heads.

Image source: Getty Images.

Last year, as the pandemic drove people online, growth in monthly active people (MAP) accelerated. At the same time, 79% of MAP were also daily active people (DAP), up from 78% in 2019 and 77% in 2018. This indicates an uptick in engagement over time.

In the first quarter of 2021, 3.45 billion people used one of Facebook’s platforms on a monthly basis. Notably, the pandemic-driven increases in engagement continued to hold, as 79% of monthly users also signed in daily. And the average revenue per person (ARPP) increased 29% to $7.75 for the quarter.

In total, revenue jumped 48% year over year in Q1, driven by a 12% increase in the number of ads delivered and a 30% increase in the price per ad. That represents a meaningful acceleration in top-line growth compared to the company’s performance in recent years.

Metric

2018

Q1 2021 (TTM)

CAGR

Monthly Active People

2.64 billion

3.45 billion

13%

Revenue

$55.84 billion

$94.4 billion

26%

Free Cash Flow

$15.4 billion

$24.2 billion

22%

Data source: Facebook SEC filings. TTM = trailing-12-months. CAGR = compound annual growth rate.

While Facebook’s growth has been solid, investors should note that revenue has increased more quickly than free cash flow. This reflects Facebook’s weakening operating margin, which has fallen from 45% to 40% over that period.

Even so, Facebook is the leading social media platform worldwide. Over 2.7 billion people use at least one of its products every day — that’s roughly one-third of the globe’s population. That incredible scale has helped it capture 25% of the U.S. digital ad market. Only Alphabet‘s Google has taken more market share.

Going forward, if Facebook can avoid legal trouble, I think it still has room to grow.

What we know about Pinterest

Pinterest takes a different approach to social media. Rather than connecting friends and family, it’s a tool for inspiration, planning, and action. Pinterest has also gone to great lengths to build a positive environment for its users. Most social platforms can’t make the same claim.

Smiling woman interacting with smartphone.

Image source: Getty Images.

Pinterest’s growth strategy has focused on bringing more inspiring and shoppable content to its platform. For instance, it doubled down on video in 2020, enabling brands to engage consumers with dynamic stories and tutorials. Pinterest also made it possible to switch to shop mode from search, and it introduced the verified merchant program, helping consumers identify trusted sellers. In both cases, this simplifies the transition from inspiration to action, increasing value for consumers.

Those efforts also drove record growth in 2020: Pinterest added over 100 million monthly active users, and during Q4 it saw a sixfold increase in the number of businesses using shopping ads on its platform. That boosted average revenue per user (ARPU) to $4.26, up 12% from the prior year. Notably, Facebook’s ARPP was $32.03 in 2020, more than seven times higher than Pinterest’s.

In general, Pinterest has delivered solid financial results over the last few years.

Metric

2018

Q1 2021 (TTM)

CAGR

Monthly Active Users

265 million

478 million

30%

Revenue

$755.9 million

$1.9 billion

51%

Free Cash Flow

($82.6 million)

$230.4 million

N/A

Data source: Pinterest SEC filings. TTM = trailing-12-months. CAGR = compound annual growth rate.

As a caveat, investors should be encouraged by the company’s strong performance in 2020, but they should also expect growth to slow in 2021. As the pandemic abates, people will probably spend less time online.

Even so, Pinterest has plenty of room to grow its business, especially in international markets. Given its execution so far, I think the future looks bright for this social media company.

The verdict

Facebook has achieved incredible scale, dwarfing Pinterest. It’s also much more profitable in terms of absolute dollars. That makes Facebook a formidable competitor.

However, Pinterest has also managed to differentiate itself. Its platform is often a safer environment for brands, since ads are less likely to appear beside hateful content. Additionally, people come to Pinterest looking for inspiration — in other words, they come to Pinterest with the intent to shop. That makes it a better place for marketers to spend ad dollars.

Finally, Pinterest is growing more quickly and its ARPU is several times smaller than Facebook’s ARPP. That means Pinterest has plenty of room to expand, which should create more upside for long-term investors. That’s why Pinterest is the better buy.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Trevor Jennewine owns shares of Pinterest. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Facebook, and Pinterest. The Motley Fool has a disclosure policy.

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PINTEREST

The World’s Most Popular Wedding Destinations, According To Pinterest

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Blue coloured medina in Chefchaouen, Morocco.

According to Pinterest, Morocco is the number one place users want to plan a destination wedding.

getty

Throughout the Covid-19 pandemic, Pinterest has been there to help us travel the world vicariously, find inspiration and share tips for visiting places that might otherwise be off limits to visitors. Now, as more people around the world are vaccinated and travel begins to make its inevitable comeback, the popular social media site is once again serving as a place to organize ideas for dream trips including epic honeymoons and destination weddings in beautiful places the world over.

A recent study by Money.co.uk, a financial site based in the U.K., revealed the most commonly “pinned” wedding destinations around the world and in the U.S. that people have created Pinterest boards for.

Here are the results for the most popular wedding destinations around the world, by country, according to Pinterest users:

1. Morocco, with 1,001 dedicated Pinterest boards.

2. Greece, with 1,000 dedicated Pinterest boards.

3. France, with 999 dedicated Pinterest boards.

4. Italy, with 998 dedicated Pinterest boards.

5. Mexico, with 997 dedicated Pinterest boards.

6. Bali, with 996 dedicated Pinterest boards.

7. Ireland, with 990 dedicated Pinterest boards.

8. Australia, with 984 dedicated Pinterest boards.

9. New Zealand, with 981 dedicated Pinterest boards.

10. Fiji, with 979 dedicated Pinterest boards.

11. Canada, with 978 dedicated Pinterest boards.

12. England, with 977 dedicated Pinterest boards.

13. Ibiza, Spain, with 975 dedicated Pinterest boards.

14. Scotland, with 972 dedicated Pinterest boards.

15. Thailand, with 960 dedicated Pinterest boards.

16. Spain, with 956 dedicated Pinterest boards.

17. Portugal, with 889 dedicated Pinterest boards.

18. USA, with 821 dedicated Pinterest boards.

19. The Bahamas, with 732 dedicated Pinterest boards.

20. Wales, with 725 dedicated Pinterest boards.

Here’s a look at the results for the most popular wedding destinations in the U.S., according to Pinterest users:

1. California, with 1,003 dedicated Pinterest boards.

2. Colorado, with 1,000 dedicated Pinterest boards.

3. Florida, with 1,000 dedicated Pinterest boards.

4. Hawaii, with 1,000 dedicated Pinterest boards.

5. Virginia, with 998 dedicated Pinterest boards.

6. New York, with 997 dedicated Pinterest boards.

7. Texas, with 996 dedicated Pinterest boards.

8. Georgia, with 994 dedicated Pinterest boards.

9. Washington, with 993 dedicated Pinterest boards.

10. Arizona, with 988 dedicated Pinterest boards.

11. Maine, with 985 dedicated Pinterest boards.

12. Oregon, with 981 dedicated Pinterest boards.

13. Utah, with 978 dedicated Pinterest boards.

14. Montana, 977 dedicated Pinterest boards.

15. Maryland, with 976 dedicated Pinterest boards.

16. Ohio, with 973 dedicated Pinterest boards.

17. Tennessee, with 968 dedicated Pinterest boards.

18. Minnesota, with 949 dedicated Pinterest boards.

19. North Carolina, with 943 dedicated Pinterest boards.

20. Michigan, with 938 dedicated Pinterest boards.

To get the results, the folks at Money.co.uk counted the number of public Pinterest boards associated with several keywords related to weddings and popular U.S. and international destinations. Pinterest users created boards for locales ranging from tropical islands and beaches to bustling cities as well as a blend of coastal and landlocked states, while Colorado, Florida and Hawaii tied with 1,000 boards, respecively. The study also focused on current trends, with Harry Potter, vintage, earthy, natural and farm themed weddings taking the top five spots for themed weddings, as well as popular wedding dress styles and bridal bouquets.

If you’re planning a destination wedding, pay attention to the Centers for Disease Control and Prevention (CDC) travel guidelines—as of this writing, all international travelers need to provide negative Covid-19 test results before they’re allowed to re-enter the U.S., whether or not you’re fully vaccinated—and stay on top of local health and safety protocols regarding mask-wearing and social distancing wherever you go.

All details and policies mentioned were accurate as of press time.

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PINTEREST

Pinterest launches ‘You might just surprise yourself’ campaign

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Pinterest has partnered with creative agency, Droga5 to launch its latest campaign ‘You might just surprise yourself’, exploring how the platform can expand people’s interests in ways they never saw coming.

To kick things off, Pinterest has released a TV ad in the UK, managed by agency Media Hub. The integrated campaign will run across the US and UK including high impact out-of-home, along with audio, podcast, and provocative social ads.

Directed by Yann Demange, the campaign’s hero film ‘Discovery’ – filmed in Mexico City and Los Angeles – takes the audience on a fast-paced journey of exploration focusing on one woman’s discovery before branching out into an unbroken, energetic thread of other characters’ experiences. 

A series of 15 films take this premise further, exploring the surprising leaps and ways people can expand their interests. These include a home chef discovering the fusion of burgers and sushi and a teenager trying his hand at flame nail art.

To expand the campaign across all media channels, high-impact mural out-of-home installations have been commissioned in London, New York, Chicago, and LA, along with high-impact media placements and unique brand partnerships to reintroduce the brand and spark inspiration in new ways. 

Pinterest has formed its first ever partnership with CRWNMAG, a hair and lifestyle culture magazine for Black women and NTWRK, a mobile-first video shopping platform that seamlessly blends entertainment and commerce.

“People need a place to dream, to explore and to visualize their future. Pinterest is the open invitation to try something you’d never thought you’d try. Our campaign demonstrates that Pinterest is a place where you can find a never-ending array of surprises – a place where the more you explore, the more you discover,” said Director of Marketing for Europe at Pinterest, Louise Richardson. “We want to bring people the inspiration to create a life they love and often that means inspiring you to try something new and giving you the confidence to try more, whether you succeed and it’s beautiful or you fail and it’s hilarious.”

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