Over one year Pinterest stock price has increased a massive 233%. Over the past three months Pinterest has increased by 62.4% compared to the market average of just 11%. While the image based social media platform is seeing healthy growth, is it time to buy?
Pinterest was launched in 2010 as an alternative social media platform that focused not on keeping up-to-date with your friends and family but in a more wholesome format of encourage hobbies and goals.The platform shows Pinners visual recommendations (Pins) based on personal interests and then allows users to organise them into collections (Boards).
Pinterest only launched a decade ago, but now sees 442 million global active users each month. Pinterest has seen a 233% increase in share price since January 2020 from $22 to over $73. Only going public in 2019, have they had enough time to prove they are a worthy investment?
Looking at their financial health, analysing Pinterest’s cash flow they have a sufficient cash runway for three years. Showing they have a long way to grow.
Pinterest has kept clear of the headlines making it a reliable stock to invest in.
Pinterest has proven very resilient to the pandemic and lockdowns and has come out as a pandemic winner seeing their price increased by seven times since a low in March. Their third-quarter report in October saw sales growing 58% year-on-year with a massive 37% increase in total monthly active users. The company has a market capitalisation of $40.7 billion, valuing it at around 103 times their expected earnings.
The website is developing to keep up with other popular social media platforms – transitioning from their simple image model to include more rich media content such as videos, gifs and interactive posts. Having other forms of media can be more engaging and keeps users using their service longer, not to mention keeping up with competitors! Another bonus of having videos and such-like is the higher advertising rates which will bolster revenue growth.
How does Pinterest perform against competitors?
With the large-cap technology sector fairly crowded, it is good to compare Pinterest’s performance with other market leaders. Zoom Video Communications has a higher probable upside indicating investing in Zoom over Pinterest is favourable. Although compared against Baidu, Pinterest outperforms with a lower downside and greater favourability with institutional investors. Furthermore, Pinterest is more volatile than Snap Inc. it has a stronger buy consensus due to its growth rates. When compared to the giant that is Twitter, Pinterest loses as Twitter has a higher possible upside, more institutional investors (72% compared to Pinterests 55%) and is less volatile. Overall, Twitter is the favourite out of these social-based tech giants.
|Company||Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Zoom Video Communications||$622.66 million||177.34||$25.31 million||$0.09||4,289.89|
|Baidu||$15.43 billion||5.4||$296 million||$5.36||44.99|
|$3.46 billion||10.51||$1.47 billion||$1.99||22.97|
The antitrust lawsuit filed against Facebook Inc. (which holds Facebook, Instagram and Whatsapp) will likely hold back price growth giving other social platforms , like Pinterest, an opportunity to shine. Pinterest is already making moves, trading with revenues at over 3 times that of Facebook.
Buy or sell?
Pinterest’s positive performance and consistent reputation see it as a strong buy.
Sales have grown by 43.37% quarterly and Pinterest has been the subject of 16 research reports in the past three months, indicating there is a strong interest in it’s performance.
Currently CNN poses Pinterest as a buy, with 16 of 24 analysts backing this. This consensus has been consistent over January, demonstrating the consistency of Pinterest’s growth.
If you are looking for a good entry point this short-term price prediction chart should help!
Although over the past month performance is at -0.67%, over a three month time frame Pinterest hold a positive 58.62%.
Using forecasts of 24 analysts, over 12 months, CNN saw Pinterest rising 8.3% in share price – equating to $75.5. The low estimate is -39.7% and the high estimate is 29.1%.
Pinterest forecasts an annual growth of over 50% this year and a revenue growth of 682% over 5 years – this means if you invested £100 today you would earn £782 by 2026.
Will you buy this sturdy grower? With growth rates of 50% a year, Pinterest appears a safe investment. To keep up to date with the latest stock market news, follow BullBear.