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RiverPark Advisors Latest Thoughts on Pinterest (PINS) Stock

Alex Smith

RiverPark Advisors, LLC an independently-owned investment firm, recently published its first-quarter RiverPark Long/Short Opportunity Fund commentary – a copy of which can be downloaded here. During the first quarter of 2020, the RiverPark Long/Short Opportunity Fund returned 9.48% (institutional shares), compared to the total return of -19.60% by the S&P 500 Index.

In the said letter, RiverPark Advisors highlighted a few stocks and Pinterest Inc. (NYSE:PINS) is one of them. Pinterest is a social networking company. Year-to-date, PINS stock lost 4.9% and on May 6th it had a closing price of $17.72. Its market cap is of $10.3 billion. Here is what RiverPark Advisors said:

"Pinterest is known for its pinterest.com website where people post pictures or “Pins” and view them to share ideas on a wide range of topics. Pinterest has more than 335 million monthly active users (MAU), 47% of total internet users in the United States, 2/3 of whom are female. The company reaches eight out of ten moms and half of all U.S. millennials ages 18-34. These users are coming to Pinterest to get inspiration for their home, their style, or upcoming travel, which often means they are actively looking for products and services to buy.

The company is still in the early stages of building an advertising product suite that fully taps its extremely attractive customer demographics. PINS’ ARPU was $3.73 last year, significantly less than SNAP’s $8, Twitter’s $25 and Facebook’s $50. PINS’ ARPU increased 15% for 4Q19 and we expect it to continue to close the gap. MAU are also growing, up 26% for the fourth quarter to 335 million, driving 46% revenue growth. Increasing users and ARPU should drive 30% revenue growth for years to come, as well as expand gross margins from 69% last year to 75%- 80% and improve operating margins from currently negative to more than 25%."

In Q4 2019, the number of bullish hedge fund positions on PINS stock increased by about 12% from the previous quarter (see the chart here).

Disclosure: None. This article is originally published at Insider Monkey.