Not every stock can win the day when it comes to filing a company’s quarterly earnings. And there are times that a good company takes a royal beating. That’s what we’re looking at right now with Pinterest (NYSE:PINS) stock.
Pinterest is down a whopping 20% since it reported second-quarter earnings in late July. I think investors are overreacting to a nugget in the report that showed monthly users fell on a year-over-year basis.
Granted, nobody wants to see something like MAU fall when it comes to a social media company. Particularly one that has been growing as much as Pinterest.
But I think there are still plenty of reasons to like PINS stock. And if you like Pinterest as well, then rejoice — because the shares are on sale.
PINS Stock at a Glance
Pinterest is an interesting social media company because its not controversial. You’ll never see the CEO of Pinterest being hauled before Congress to talk about why its banning or not banning people who express or don’t express a specific political viewpoint.
You won’t see Pinterest disparaged for being used as a platform for predators, or as a place where people are unmercifully bullied.
When it comes to social media companies, Pinterest is delightfully tame. And that makes it unique.
The San Francisco-based social media platform is a place where people can create online pinboard to post and share items of their interest. Sometimes that means recipes, fashion, interesting photos, animated GIFs or videos.
“Whether it’s recipe ideas during the pandemic or dream vacation planning for the future, I’m proud that we now help 478 million people every month find inspiration to create a life they love,” Pinterest co-founder and CEO Ben Silbermann said.
And the company has been growing by leaps and bounds. Founded in 2010, Pinterest went public in 2019 with a market capitalization of roughly $11 billion. Now it’s valued at more than $37 billion.
We’ve already heard news about monthly active users, which were down about 7% in the second quarter from a year ago. Obviously, that’s not the news that investors wanted to hear, but it’s also important to put things in perspective.
What was happening in the U.S. in the second quarter of 2020? That was the beginning of the Covid-19 lockdown. Businesses were closed, people were either laid off or working from home and kids were attending virtual school.
That’s when the engine really started moving for Pinterest stock. The company saw gains of more than 200% in 2020 as people were pretty much stuck with streaming services, gaming and the internet for most types of entertainment.
Now look at today. The Delta variant is causing some areas to reinstitute mask mandates indoors, but businesses are steadily marching on to a full in-office reopening. Unemployment is down to 5.4%. It’s no wonder that people are spending less time on Pinterest and more time out in the physical world.
And even with those facts, Pinterest managed to beat analysts’ expectations in the second quarter for revenue and earnings. The company posted $613 million revenue and and adjusted earnings-per-share of 25 cents. Wall Street had been expecting $561.88 million in revenue and adjusted EPS of 13 cents.
Pinterest Growth Drivers
I’ve written before about how Pinterest’s platform is considered an “advertiser’s dream” because of its functionality. People go there to look for decorating ideas, for instance. They find something they like and they can just click on it to buy it. It doesn’t get any easier for a consumer, and that’s really appealing to an advertiser.
The continued steps that Pinterest is taking to improve its platform are huge. Its “Shopping List” feature will allow users to save Product Pins in one place, and will let users know if price tags are reduced.
Shoppers will also be able to search for products by brand and price.
For sellers and advertisers, Pinterest extended its Verified Merchant Program to multiple regions across the globe, and its “Shop Tab” expanded has a global reach, as well.
The Bottom Line
Of course, everyone would have been happier if Pinterest had managed to increase its monthly average user number, or even keep it flat. But we are living in a different world than we were a year ago — thankfully — and things are slowly getting back to normal.
Even without an artificial pandemic bump in MAUs, Pinterest is showing continued revenue growth. It’s investing in improving its advertising-friendly platform. And for the foreseeable future, it will remain a social media stock with a dedicated audience and devoid of controversy or scandal.
PINS stock has a B grade and a buy recommendation in my Portfolio Grader.
On the date of publication, Louis Navellier had a long position in PINS. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article. The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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