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Pinterest, Inc.'s (NYSE:PINS) Shift From Loss To Profit

Simply Wall St

Pinterest, Inc.'s (NYSE:PINS): Pinterest, Inc. provides a visual discovery engine that helps users to discover ideas for various projects and interests worldwide. The company’s loss has recently broadened since it announced a -US$63.0m loss in the full financial year, compared to the latest trailing-twelve-month loss of -US$1.2b, moving it further away from breakeven. The most pressing concern for investors is PINS’s path to profitability – when will it breakeven? I’ve put together a brief outline of industry analyst expectations for PINS, its year of breakeven and its implied growth rate.

View our latest analysis for Pinterest

Consensus from the 18 Interactive Media and Services analysts is PINS is on the verge of breakeven. They anticipate the company to incur a final loss in 2021, before generating positive profits of US$399m in 2022. So, PINS is predicted to breakeven approximately 3 years from today. What rate will PINS have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 78%, which signals high confidence from analysts. If this rate turns out to be too aggressive, PINS may become profitable much later than analysts predict.

NYSE:PINS Past and Future Earnings, September 2nd 2019

Given this is a high-level overview, I won’t go into details of PINS’s upcoming projects, however, keep in mind that typically a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing I’d like to point out is that PINS has managed its capital judiciously, with debt making up -1.0% of equity. This means that PINS has predominantly funded its operations from equity capital,and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of PINS to cover in one brief article, but the key fundamentals for the company can all be found in one place – PINS’s company page on Simply Wall St. I’ve also compiled a list of key aspects you should look at:

  1. Valuation: What is PINS worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether PINS is currently mispriced by the market.
  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Pinterest’s board and the CEO’s back ground.
  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.