Do Recent Results Make Pinterest A Buy Right Now?

Pinterest has experienced a blockbuster quarter, during the global pandemic, so will it continue growing?

Aug. 20, 2020

Pinterest (NYSE: PINS) has had a bumper year and is emerging as a social media hero. The stock rallied, outperforming the likes of competitors Facebook, Twitter, and Snap. The platform has a niche positioning and allows users to search for a specific topic and ‘pin’ pictures, articles, videos, and GIFs to their account. This uniqueness gives Pinterest the best chance at accelerating its growth in the coming months. 

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The bull case for Pinterest

The numbers really speak for themselves when it comes to this social media company which reported $272 million in revenue for the second-quarter on July 31, 2020. This is an impressive figure considering the hardship of many revenue-driven businesses due to the ongoing pandemic — the figure is also up by 4% year-on-year. To add to this stellar performance, Pinterest’s monthly active users increased by 39% for the period to 416 million.

The habits of many people have changed since the coronavirus spread, meaning more people are flicking through social platforms. Pinterest saw a shift in activity during this time from its core demographic, who mostly search for beauty, fashion, and lifestyle, shift to looking for recipes and interior decorating tips. In turn, Pinterest expanded its client base, with half of its advertising revenue made up by small and medium-sized companies. 

Pinterest is also ramping up its e-commerce experience as the pandemic saw a huge increase in users purchasing products online. One report found that overall online spend is up more than 30% from the beginning of March through to mid-April compared to last year. Due to the large investment from smaller businesses, Pinterest has partnered with Shopify (NYSE: SHOP) to give its customer base the best encounter possible.


How has recent security of other social media giants helped Pinterest?

Pinterest received a slight boost in revenue following an advertising boycott on social media giant, Facebook, which boasts around 8 million advertisers. In July, there was a lot of pressure on social media generators to curb hate speech and misinformation. Many big companies, including Starbucks and Ford, joined forces and pulled their spending for at least a month from Facebook. 

There was also similar pressure on Twitter, particularly with Donald Trump’s controversial content, in which the social media company blocked a number of tweets for sharing misinformation on COVID-19. Advertisers increased their spend on Pinterest by about 20% compared to the same time last year, the company saying it injected extra revenue but the majority was still from strategic investments.

What is Pinterest’s growth potential?

Pinterest has really proven it can adjust to the economic climate and focus on areas where it can continue monetizing its business. Its international growth has been impressive for the period, with overseas revenue making up 15% of Pinterest’s overall revenue for the quarter, compared to 9% at the same time last year. 

The company is expected to report a 50% increase in revenue for July 2020 and revenue in the current quarter could also increase by 30%. Overall, Pinterest is poised to keep growing this year and is a seemingly great long-term buy.

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