Photo-sharing site Pinterest (PINS) traded down 16% in after-hours trading on Tuesday following mixed first quarter earnings results.
Q1 Non-GAAP EPS of -$0.10 missed the Street forecast by $0.01; although GAAP EPS of -$0.25 beat by $0.01. Revenue of $271.94M (up 34.7% year-over-year) also beat the consensus expectations by $1.25M.
Most notably, net loss significantly increased to $141.2M from $41.4M last year, while quarter-to-date Ad Revenue trends were down 8% year-over-year vs. market expectations of 0% to up 10%.
Average revenue per user (ARPU) of $0.77 decelerated to 7% year-over-year due to lower international ARPU vs US as PINS expands its global reach.
Positively, global monthly active users (MAUs) grew 26% year-over-year to 367M, with a record-high 32M net additions, and record levels of engagement in terms of impressions, searches, saves, and board creations.
“PINS demonstrating limited ads resiliency because of less developed ads infrastructure, still experimental presence among marketers, and its exposure to omni-channel retail ad $s” commented RBC Capital analyst Mark Mahaney following the earnings release.
He notes that while management chose not to reinstate 2020 guidance, it did disclose that quarter-to-date advertising revenue trends had “stabilized” at down 8%.
Nonetheless he reiterated his PINS buy rating with a price target of $27. “We believe PINS is innovating well on user and advertiser functionality, faces a material monetization opportunity, and has the balance sheet to weather the storm” the analyst concludes.
Overall the stock scores a Moderate Buy analyst consensus, with the majority of analysts preferring to stay on the sidelines for now. The $25 average analyst price target indicates 19% upside from current levels. (See PINS stock analysis on TipRanks)