Pinterest (PINS) Stock Trades Up, Here Is Why
What Happened:
Shares of social commerce platform Pinterest (NYSE: PINS) jumped 6% in the morning session after following a Piper Sandler report that the company may be exploring a potential advertising partnership with Google in the United States. This update provides further insights regarding Pinterest's expansion strategy as it looks to better monetize more markets. Management noted during its Q4'2023 earnings call that it will "enable ads to be served on Pinterest via Google's Ad Manager. " Given Google's significantly bigger reach, a partnership should be accretive to Pinterest's growth narrative as it explores new markets. After the initial pop the shares cooled down to $35.70, up 2.1% from previous close.
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What is the market telling us:
Pinterest's shares are quite volatile and over the last year have had 8 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was about 2 months ago, when the stock dropped 21.9% on the news that the company reported fourth-quarter results with revenue missing analysts' expectations, though EPS beat. Revenue guidance for the next quarter also fell below expectations.
Bernstein's analyst Mark Shmulik highlighted the market's concerns after the results, "Coming out of this earnings season, it's fair to ask whether the smaller platforms (SNAP, PINS) are structurally disadvantaged and sub-scale in what increasingly looks like a winner-take-most digital ad landscape." This refers to the competition from bigger players such as Alphabet and Meta. On the other hand, Pinterest added new users this quarter and beat expectations for MAUs (monthly active users).
Overall, the results were weak, given the underwhelming guidance and considering the strong results delivered by Meta earlier in the season, which raised the bar for digital ad stocks.
Pinterest is down 1.4% since the beginning of the year, and at $35.70 per share it is trading 13% below its 52-week high of $41.05 from February 2024. Investors who bought $1,000 worth of Pinterest's shares at the IPO in April 2019 would now be looking at an investment worth $1,463.
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