Online visual discovery platform Pinterest (NYSE:PINS) has gone from a social media niche business to a massively successful company in 2020. Without a doubt, the onset of the novel coronavirus contributed to the share price surge in PINS stock.
To sum it up, Pinterest has helped people to cope and stay sane during lockdowns. The platform has helped bored and sometimes jobless people enjoy a fun, social experience.
It has also facilitated a side hustle for some folks during these recessionary times. If you’re handy with crafts, you can develop a following and post enticing pictures of your wares on Pinterest.
Yet, the bottom line for prospective investors comes down to the user base and the revenues. So, how does Pinterest stack up in these areas?
PINS Stock at a Glance
At the very least, we can say with confidence that the market has given PINS stock its seal of approval. Sure, there was a harsh correction in the share price during the coronavirus crisis in March.
Without a doubt, it was harrowing to witness PINS stock tumble from $25 to $10-ish during that time. Brave investors who bought that dip were richly rewarded, though, as a major bull market would promptly ensue.
Waiting for another deep dip hasn’t been a winning strategy since March. The PINS share price has gone up relentlessly, month after month. Evidently, the trading community sees the enduring value of Pinterest’s social media platform.
Impressively, PINS stock touched a fresh 52-week high price of $70.25 in late November. The next milestones for the bulls should be $85 and then the big $100, which might arrive fairly soon.
A Stellar Quarter
Some value-focused investors might balk at the idea of buying PINS stock near its 52-week high. To that objection, I would point out that waiting for price pullbacks has led to investors leaving a whole lot of money on the table.
Besides, a rich share price could be justified when the company’s financials are strong. As evidence of this, we should point out that Pinterest had an outstanding third quarter.
Wall Street might have been slightly optimistic, but the fiscal results easily beat the analysts’ projections. For one thing, they were only expecting adjusted earnings of three cents per share (per Refinitiv), yet the actual result turned out to be 13 cents per share.
As if that weren’t enough, Pinterest also reported $443 million in quarterly revenues. That’s a definite beat compared to the expected $383.5 million (per Refinitiv).
Broad-Based Strength
None of this would provide much fuel for the bulls if Pinterest’s user base wasn’t growing. After all, there would be no earnings or revenues without the users.
Fortunately, the company offered up a quarterly beat in this area as well. To be more specific, whereas Wall Street forecast 436.38 million monthly active users for the third quarter (per FactSet), the posted result was 442 million monthly active users.
Moreover, this growth hasn’t been limited to the U.S. Amazingly, Pinterest’s third-quarter international monthly active user count was 343 million, representing a 46% year-over-year increase.
The executives at Pinterest offered some insights into these terrific numbers. For instance, CEO and Co-founder Ben Silbermann observed, “More than ever before, people are coming to Pinterest to get inspiration for their lives—everything from planning early for a socially distant Halloween to creating great home schools for their kids.”
Meanwhile, CFO and Head of Business Operations Todd Morgenfeld offered that “the broad based strength of our business, driven by recovering advertiser demand as well as positive returns from our investments in advertiser products and international expansion” contributed to Pinterest’s blockbuster fiscal results.
The Takeaway
This is no time to fear the surge in the PINS stock price. Wary investors should take note of the company’s impressive fiscal statistics.
Unless there’s a reason to believe otherwise, the broad-based strength in Pinterest’s user base and revenue growth should prompt another leg up in the PINS share price.
— Louis Navellier and the InvestorPlace Research Staff
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Source: Investor Place