We came across a bullish thesis on Pinterest, Inc. (PINS) on Long-Term Pick’s Substack by Dan. In this article, we will summarize the bulls’ thesis on PINS. Pinterest, Inc. (PINS)’s share was trading at $28.99 as of Nov 18th. PINS’s trailing and forward P/E were 90.59 and 16.03 respectively according to Yahoo Finance.
Photo by Souvik Banerjee on Unsplash
Pinterest (PINS) presents a compelling investment opportunity as the most undervalued social media stock, backed by strong operational performance and promising growth catalysts. In Q3 2024, the company achieved record-breaking metrics, including a revenue of $898 million, up 18% year-over-year, and an adjusted EBITDA margin of 27%, reflecting a 280 basis point improvement. Monthly Active Users (MAUs) surged to 537 million, growing 11% year-over-year, with significant contributions from international markets, where revenue in regions like Europe and the Rest of the World grew 20% and 38%, respectively. The U.S. and Canada, Pinterest’s core markets, demonstrated resilience, with revenues up 16%, underscoring the platform’s robust monetization capabilities.
Pinterest’s strategic integration of AI into its platform has driven actionable engagement, improving ad relevance and cost-efficiency, and enhancing the overall user experience. Initiatives like the AI-driven Performance+ tool, which reduces cost per action by 10%, and expanded partnerships with Amazon Ads have fortified its competitive position in the advertising space. These developments have fueled a 41% year-over-year increase in ad impressions, offsetting challenges such as a 17% decline in ad pricing caused by international market shifts.
Despite macroeconomic headwinds, particularly in the food and beverage subsector, and the early-stage adoption of new features like Performance+, Pinterest has demonstrated its ability to navigate challenges while maintaining solid growth. Its international expansion, though in its nascent phase, offers significant untapped potential, providing a long-term revenue growth avenue.
The company’s balance sheet remains strong, with $2.4 billion in cash and equivalents, enabling flexibility for continued share repurchases, which reached $466 million in Q3 and $500 million year-to-date. With Q4 revenue guidance of $1.125 billion to $1.145 billion, reflecting 15% to 17% growth year-over-year, Pinterest’s outlook remains optimistic. At a current price of $29.37, the stock trades at a significant discount to its base-case target price of $42.92, offering an attractive entry point and substantial upside potential for investors.
Pinterest, Inc. (PINS) is not on our list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 61 hedge fund portfolios held PINS at the end of the second quarter which was 64 in the previous quarter. While we acknowledge the risk and potential of PINS as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than PINS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.