Company Reports

In line with our expectation for accelerating growth, Pinterest delivered strong first-quarter results as user engagement and monetization continued to improve. Management expects strong growth to continue as recent efforts to attract more ad dollars attract more advertisers. The firm also plans to ramp up operating expense growth to invest further in artificial intelligence and sales personnel. We are maintaining our $43 fair value estimate, leaving the shares roughly fairly valued after rallying on earnings.

Pinterest is focused on carving out a piece of the global digital advertising market. While we don't expect it to displace online advertising behemoths Google and Facebook or up-and-coming Amazon, we expect it to attract a small slice of digital ad spending.

Pinterest is focused on carving out a piece of the global digital advertising market. While we don't expect it to displace online advertising behemoths Google and Facebook or up-and-coming Amazon, we expect it to attract a small slice of digital ad spending.

Pinterest, an online product and idea discovery company, is focused on carving out a piece of the global digital advertising space. While we don't expect Pinterest to displace online advertising behemoths Google and Facebook or up-and-coming Amazon, we do expect it to attract a small pinch of digital ad spending, which we estimate is an addressable market of more than $600 billion.

We are raising our fair value estimate of narrow-moat Pinterest to $43 from $37. While the stock declined 9% after hours in reaction to the fourth-quarter revenue coming in slightly below expectations, it remains fairly valued.

Pinterest’s network effect strengthened further during the third quarter, demonstrated by strong top- and bottom-line results on the back of user growth, better engagement, and higher monetization. The solid revenue growth created operating leverage and margin expansion, which management stated will continue, supporting our assumptions. In addition to the impressive results, some comments from the firm also confirm our belief that hesitancy on the part of advertisers is declining, which is good news for the overall advertising market. Regarding the firm’s platform specifically, more advertisers are connecting their marketing data with Pinterest, which in our view indicates confidence by the advertisers and their plans to spend more on the platform in the long run. We slightly increased our projections, which resulted in a $37 fair value estimate, up from $36.

Pinterest, an online product and idea discovery company, is focused on carving out a piece of the global digital advertising space. While we don't expect Pinterest to displace online advertising behemoths Google and Facebook or up-and-coming Amazon, we do expect it to attract a small pinch of digital ad spending, which we estimate is an addressable market of more than $600 billion.

We are maintaining our $36 fair value estimate on narrow-moat Pinterest. The firm’s second-quarter results indicate that its network effect is strengthening as more advertisers adopt its ad performance measurement tools, which we think will increase ad prices and user monetization. At the same time, continuing user growth and improvements in engagement are providing more opportunities for advertisers to reach an audience.

We were impressed with Pinterest's continuing user growth and the return of solid demand for broad-based advertising on its platform during the first quarter. In addition, Pinterest announced an advertising partnership with Amazon that should improve user monetization beginning next year. While management's second-quarter outlook for revenue and operating costs was disappointing, we remain confident that with an increasing user base, further improvement of the ad platform for direct response campaigns, the Amazon partnership, and fewer economic uncertainties, Pinterest is well-positioned to increase user monetization in the second half of 2023 and beyond. We are maintaining our $36 fair value estimate. We continue to view narrow-moat Pinterest as attractive.

The collapse of Silicon Valley Bank has created doubt about access to capital for tech firms, but we do not expect any material impact on online media or advertising firms under our coverage and we are not adjusting our fair value estimates on these stocks. The chance of Silicon Valley Bank becoming a contagion did decline a bit as of March 12. While a second bank, Signature Bank, was closed, regulators announced that all deposits at both banks will be accessible beginning on March 13.

While Pinterest’s fourth-quarter results included a slowdown in revenue growth, mainly due to economic uncertainty and currency headwinds (like its peers), we were again impressed with the increase in users and monetization. The expansion of the user base supports our narrow moat rating, based on the network effect. We think the firm’s various cost-control moves and investments in its ad offerings have positioned it to experience strong operating leverage as revenue growth strengthens throughout 2023 and 2024. Management’s first-quarter revenue guidance implies full-year growth below our expectation as it believes that the macro uncertainty could linger. We have lowered our projections cutting our fair value estimate to $36 per share from $43. While the stock has reacted negatively to the fourth-quarter results, we still view this name as attractive.

Pinterest, an online product and idea discovery company, is focused on carving out a piece of the global digital advertising space. While we don't expect Pinterest to displace online advertising behemoths Google and Facebook or up-and-coming Amazon, we do expect it to attract a small pinch of digital ad spending, which we estimate is an addressable market of more than $600 billion.

The Wall Street Journal has reported that Meta Platforms could be held accountable for not complying with the General Data Protection Regulation, the European privacy rules that went into effect in 2018. The European Data Protection Board confirmed that it has reached a decision but will not disclose it for at least a month. While Meta is likely to appeal in what the Journal points out will probably be a lengthy process, we think the firm could ultimately be liable for up to $13 billion in fines (around 4% of revenue since the rules went into effect) or up to 2% of our $260 fair value estimate.

Unlike its peers, Pinterest reported better-than-expected third-quarter results as the turnaround in its user count was accompanied by increased advertising demand. Pinterest is becoming less of a platform for advertisers to experiment on and is now nearly a regular on their lists to purchase from. Pinterest’s resiliency toward macroeconomic uncertainty is mainly due to its ability to provide advertisers options through the entire marketing funnel, as most users access the app with a shopping or purchasing intent. This also generates valuable first-party data, which reduces dependence on Apple’s data on user behavior in other apps.

Pinterest, an online product and idea discovery company, is focused on carving out a piece of the global digital advertising space. While we don't expect Pinterest to displace online advertising behemoths Google and Facebook or up-and-coming Amazon, we do expect it to attract a small pinch of digital ad spending, which we estimate is an addressable market of more than $600 billion.

While Pinterest posted mixed second-quarter results, we were pleased with user monetization, indicating continuing demand improvement from advertisers. Pinterest missed FactSet bottom-line expectations as investments in commerce and content enhancements continued. At the same time, we welcome that Bill Ready, the firm’s new CEO, will not run Pinterest as a growth-at-any-cost firm as he mentioned on the earnings call. Ready’s position at the helm is also supported by the firm’s new activist investor, Elliott Management.

Pinterest, an online product and idea discovery company, is focused on carving out a piece of the global digital advertising space. While we don't expect Pinterest to displace online advertising behemoths Google and Facebook or up-and-coming Amazon, we do expect it to attract a small pinch of digital ad spending, which we estimate is an addressable market of more than $600 billion.

Pinterest announced on June 28 that co-founder Ben Silbermann has stepped down as CEO and president to become executive chair. Pinterest's new CEO is Bill Ready, the former president of Google's commerce and payment business. He also has held executive positions at PayPal and Venmo. We think Ready is likely to make more aggressive and timely investments in enhancing Pinterest's commerce capabilities, thereby attracting not only more consumers to shop and purchase on the platform but also more advertisers with a focus on direct-response campaigns. We have not made any adjustments to our model. Our fair value estimate for this narrow-moat and 5-star name remains $48 per share.

Pinterest, an online product and idea discovery company, is focused on carving out a piece of the global digital advertising space. While we don't expect Pinterest to displace online advertising behemoths Google and Facebook or up-and-coming Amazon, we do expect it to attract a small pinch of digital ad spending, which we estimate is an addressable market of more than $600 billion.

Pinterest posted strong first-quarter 2022 results which exceeded consensus estimates on the top and bottom line. While the firm’s monthly active user count continues to decline coming out of the pandemic lockdowns, this impact was more than offset by increased revenue as the demand from advertisers remains intact. Despite macroeconomic and geopolitical headwinds, Pinterest continues to focus on long-term ambitions that the firm believes will increase monthly active users further down the road.