Pinterest Inc: Social Media Stock Up 33% Since Reporting Q3 Revenue

pins stockPinterest Stock Up 223% Year-over-Year & 2021 Could Be Even Better

Pinterest Inc (NYSE:PINS) is a great social media tech stock that has done well during the coronavirus pandemic. PINS stock is up 223% year-over-year, 257% year-to-date, and 560% since hitting March lows. It’s also up 250% from its April 2019 initial public offering (IPO) price.

A number of COVID-19 vaccines have been reported in the news, and more will follow, but the fact is, online companies like Pinterest will continue to do well in the post-pandemic world.

The economy will return to some form of normalcy in 2021, but the coronavirus pandemic has changed the way consumers shop and people interact with one another. And when it comes to digital marketing, Pinterest Inc is an advertiser’s dream.

Pinterest is a web site where users “pin” their favorite home and style ideas, recipes, wellness tips, and virtually anything they find on the Internet. The joy for advertisers is, they have a captive audience who just need to click on a pin to buy something.

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“Pinners” (which is what Pinterest users are called) might go on the site merely to get ideas, but they often end up buying something. In the digital age, that kind of convenience is not something consumers will want to give up.

And the numbers back that up.

In late October, Pinterest Inc reported strong third-quarter revenue and user growth. And management expects fourth-quarter revenue to grow 60% year-over-year.

That kind of growth might be tough to sustain over the coming quarters, but Pinterest has emerged as a leading Internet content and social media platform, which will likely continue to provide investors with long-term growth.

Investors believe Pinterest stock has a lot of room to grow. As of this writing, PINS stock is trading hands at $66.46, climbing an additional 33% since the company reported its third-quarter financial results.

Chart courtesy of StockCharts.com

Strong Third-Quarter Results

Pinterest announced that its third-quarter revenue for the period ended September 30 increased 58% year-over-year to $443.0 million. (Source: “Q3 2020 Letter to Shareholders,” Pinterest Inc, October 28, 2020.)

In the quarter, the number of monthly active users (MAUs) grew 37% year-over-year to 442 million. In the U.S., the company’s MAUs increased by 13% to a record 98 million. Internationally, its MAUs increased by 46% to a record 235 million.

Pinterest Inc’s average revenue per user (ARPU) increased significantly to $1.03, compared to $0.90 in the third quarter of 2019. The expansion in its global APRU was driven by an increase in advertising demand on the company’s platform, partially offset by an increase in MAUs.

By region, the company’s U.S. ARPU was up 31% year-over-year, at $3.85, while its international ARPU was up 66%, at $0.21. Pinterest noted that its international ARPU remains in its early stages, as the company has only begun to execute its strategy to provide targeted ads to Pinners in countries other than the U.S.

Pinterest Inc reported a third-quarter 2020 net loss of $94.0 million ($0.16 per share), compared to a third-quarter 2019 net loss of $125.0 million ($0.23 per share). The company reported third-quarter adjusted net income of $87.1 million, compared to $6.0 million in the same prior-year period.

Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) were $93.0 million, versus adjusted EBITDA of $4.0 million in the third quarter of last year.

Todd Morgenfeld, CFO and head of business operations, commented, “The strong momentum our business experienced in July continued throughout the rest of the third quarter.” (Source: “Pinterest Announces Third Quarter 2020 Results,” Pinterest Inc, October 28, 2020.)

He continued, “We’re extremely pleased with the broad based strength of our business, driven by recovering advertiser demand as well as positive returns from our investments in advertiser products and international expansion.”

Analyst Take

Pinterest Inc might be the perfect social media platform for users and advertisers, even for the post-COVID-19 world. Pinterest is not about people interacting with one another; it’s about finding ideas for life.

And unlike with Facebook, Inc. (NASDAQ:FB), where ads can be exceptionally annoying, with Pinterest, the ads add value and even enhance user experience.

That’s why I think Pinterest will continue to be an excellent Internet stock for years.