10 Undervalued Stocks to Invest in According to Goldman Sachs

5. Pinterest, Inc. (NYSE:PINS)

Forward P/E ratio: 14.18

Number of Hedge Fund Holders: 73

Pinterest, Inc. (NYSE:PINS) is a visual discovery and social media platform that enables users to discover, save, and share ideas through images and videos. It operates a digital platform where users can explore topics such as home decor, fashion, recipes, and DIY projects by “pinning” content to virtual boards. PINS generates revenue primarily through advertising, offering businesses the ability to promote their products via targeted ads based on user interests and search behavior. The platform serves a diverse global user base, with a strong focus on e-commerce integration, enabling users to shop directly from pins. PINS continues to expand its features with tools for creators, businesses, and advertisers to enhance engagement and monetization.

Pinterest, Inc. (NYSE:PINS) has achieved record highs in Monthly Active Users (MAUs) and demonstrated strong engagement metrics, with weekly active to monthly active ratios reaching all-time highs. The platform has successfully transformed into a shopping destination, more than doubling its revenue growth rate in 2024 and showing deepening user engagement even with record new user growth. The company has integrated AI deeply into every aspect of the platform, leveraging unique curation behavior and shopping signals to enhance personalization. PINS reported significant improvements in ad performance, with 90% growth in clicks to advertisers in Q4, building on 100% growth from the previous year. Gen Z has emerged as the platform’s largest and fastest-growing demographic, comprising 40% of users, with 66% of weekly Gen Z users considering the Pinterest platform as their first destination for shopping.

Pinterest, Inc. (NYSE:PINS) has also demonstrated strong financial performance, generating over $1 billion in adjusted EBITDA with a 90%-plus free cash flow conversion rate, while simultaneously expanding margins and investing in AI capabilities. The company’s AI investments have yielded significant results, including a 10 percentage point lift in recommendation relevancy, doubled relevancy in search ads over two years, and a 30-fold increase in context window leading to improved user engagement. The platform maintains a strong international growth potential, with approximately 80% of users outside U-CAN but only representing 20% of revenue, indicating significant monetization opportunities. With a forward P/E ratio of 14.18, PINS is one of Goldman Sachs’s undervalued stocks.