Pinterest PINS shares jumped 9.6% to close at $21.51 on Jan 14 after an eMarketer report showed that it surpassed Snapchat SNAP as the third-largest social media service in the United States, following Facebook FB and Instagram.
Per the report, Pinterest had 82.4 million users in 2019, up 9.1% year over year compared with Snapchat’s 80.2 million users, which was up 5.9% year over year.
Pinterest’s user growth can be attributed to its universal appeal across different age groups, while Snapchat caters primarily to a younger audience.
Pinterest, Inc. Price and Consensus
Pinterest, Inc. price-consensus-chart | Pinterest, Inc. Quote
Pinterest’s Expected User Growth In 2020
Notably, Snapchat has a commanding lead among younger users — 66.5% of kids aged 12 to 17 use it versus 28.1% for Pinterest, and 81.3% of young adults aged 18 to 24.
However, Pinterest is expected to benefit from growth in user base across age groups. The company’s users are expected to make up 41.1% of all U.S. social network users in 2020, close to Snapchat’s 39.7%.
The market research firm expects Pinterest to be more popular among U.S. users in the years ahead, with the online bulletin board's lead on the image-centric messaging service widening through the end of 2023.
Pinterest is forecast to keep on growing faster in future years: 4.4% in 2020, 2.8% in 2021, and 2% in 2022.
Pinterest’s Top-Line Growth Initiatives for 2020
Pinterest’s recent initiatives are expected to drive user growth in 2020 as predicted by the eMarketer report.
Pinterest generates the bulk of its revenues from U.S. users and is in the early stages of efforts to boost international ad sales. The company launched various features at the end of 2019 to support advertisers on the platform and attract new ones.
On Dec 10, 2019 the company reported more than 200 billion ideas saved to over 4 billion boards. Pinterest Trends was launched in beta to help brands get deeper insights into planning behaviors on the platform, and allow them to allocate budgets to campaigns during various planning stages.
Moreover, new business profile features with video and shop tabs, and expanding Catalogues and Shopping Ads features in France, Germany, Spain and Italy are expected to increase advertisers on the platform, thus driving average revenue per user in the near term.
Recently, Pinterest launched emotional well-being activities for Pinners in nine additional countries, including the UK, Ireland, Canada, Australia, Singapore, India, the Philippines, Hong Kong and New Zealand. The feature, which was previously available in the United States, is expected to increase its international user base in the near term.
Moreover, in November 2019, Pinterest released a feature that lets users make purchases from a selected number of online shops. The Pinterest Shop feature has hundreds of Product Pins, and users will have the ability to choose from 17 curated shops. With 200 billion pins saved by Pinners to date, the feature is expected to boost active user growth in 2020.
However, increasing competition for ad dollars from the likes of Facebook, Amazon, Google and Twitter TWTR is a major headwind for the company.
Pinterest currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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