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Pinterest Inc PINS

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Pinterest Blew Away Q4 Expectations As Its Network Effect Further Strengthens; Increasing FVE to $64

Ali Mogharabi Senior Equity Analyst

Analyst Note

| Ali Mogharabi |

Pinterest’s fourth-quarter results easily beat our projections and the FactSet consensus estimates as user growth and higher ad spending drove strong revenue growth, which led to margin expansion. As we had expected, the coronavirus pandemic, along with the overall shift to digital commerce, pushed consumers to increase online spending, which drove the urge to discover ideas on Pinterest, which then attracted more advertisers to the platform. However, Pinterest’s network effect is strengthening much faster than we anticipated. We have increased our top- and bottom-line projections for the firm, resulting in an increase in our fair value estimate to $64 from $42. However, we recommend new investors wait for a pullback before committing capital to this narrow-moat name.

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Company Profile

Business Description

Pinterest is an online product and idea discovery platform that helps users gather ideas on everything from recipes to cook to destinations to travel to. Founded in 2010, the platform consists of a largely female audience, at roughly two thirds of its more than 365 million monthly active users. The company generates revenue by selling digital ads and is now rolling out more in-platform e-commerce features.

505 Brannan Street
San Francisco, CA, 94107
T +1 415 762-7100
Sector Communication Services
Industry Internet Content & Information
Most Recent Earnings Dec 31, 2020
Fiscal Year End Dec 31, 2019
Stock Type Speculative Growth
Employees 2,545