This report was generated using published research from our Communications team led by Sector Head Andrew Freedman. If you want to access more Communications research, CLICK HERE.
COMPANY OVERVIEW:
Pinterest (PINS) operates as a visual search and discovery platform in the United States and internationally. Its platform allows people to find ideas, such as recipes, home and style inspiration, and others; and to search, save, and shop the ideas. The company was formerly known as Cold Brew Labs Inc. and changed its name to Pinterest, Inc. in April 2012.
KEY CATALYSTS:
Pinterest (PINS) is enhancing user engagement, with mobile Monthly Active Users (MAUs) showing stronger performance and growth compared to desktop, and achieving accelerated growth globally. User sessions are increasing faster than MAUs, signaling deeper engagement. Leveraging AI and machine learning for improved content recommendation and increasing shoppable and video content are seen as significant opportunities to boost user time on the platform.
Internationally, monetization remains a focus, with promoted PINS launched in key non-English speaking European markets since early 2019. As of Q3 2022, Pinterest ads cover approximately 94% of the global non-China digital advertising market. The monetization trajectory in non-English regions tends to be longer than in English-speaking areas.
Regarding cost control and advertising recovery, Pinterest's management has adjusted the cost structure for slower growth, aiming to keep operating expenses below revenue growth with a planned decrease in the growth rate throughout 2023, targeting margin expansion in the latter half of the year. A continued recovery in the advertising sector could significantly enhance margins and cash flow.
FINANCIAL ANALYSIS:
For the first quarter earnings, Pinterest reported revenue of $740 million, significantly ahead of the guided range of $690-705 million. This performance was driven by stronger-than-expected third-party demand contributions, setting a strong base for growth for the remainder of the year. Pinterest has projected second-quarter revenue between $835-850 million, which is ahead of street expectations and suggests robust growth year-over-year.
CONCLUSION:
Pinterest has capitalized on a recovery in user engagement and monetization efforts post-COVID, with growth in mobile user metrics and enhancements in ad technology and content personalization. The rollout of new APIs and optimization tools aims to bridge the gap between intent and transaction, improving commercial outcomes. Despite previous challenges in user retention, recent investments in user experience and strategic partnerships will improve engagement and market presence. Pinterest is on a trajectory to potentially exceed a $50 stock value in 2024.
