Pin Pinterest (NYSE: $PINS) to Your Portfolio

 

Pinterest (NYSE: $PINS)stock price rose nearly 10% after hours, following higher than expected Q4 and full-year earnings report 

Pinterest, an image sharing social media platform designed to find savings and discover new ideas, released its Q4 and full-year earnings report on February 4th. The report revealed higher than expected growth in key areas such as revenue and users

Background

Pinterest went public on April 18, 2019, for $19 a share, valuing the company at $10 billion. During the first year of trading, the share price peaked at around $35 then gradually started to decline. When the Covid-19 pandemic hit, causing the market to crash, Pinterest’s share price fell to around $10

Despite the fall in share price, this may have been a blessing in disguise. The pandemic forced shoppers to turn to online retail, and Pinterest provided a platform for consumers to find inspiration for new things and advertisers to advertise their products. As the market rallied, investors took notice resulting in Pinterest’s share price increasing over 250% during 2020.

 

Q4 2020 Earnings Report

Following a very successful 2020, Pinterest’s earnings report revealed even better growth than expected, highlighted by revenue and global monthly active users. Q4 revenue grew 76% to $706 million while 2020 revenue grew 48% year over year to $1.69 billion. Global monthly active users (MAUs) grew 37% year over year to 459 million.

The following table breaks down these numbers based on the geographic location of Pinterest users.  (ARPU denotes average revenue per user)

These numbers were higher than what financial data companies FactSet and Refinitiv predicted. In terms of revenue, Refinitiv expected $645.6 million vs. the $706 million earned. In terms of monthly active users, FactSet expected only $449 million, 10 million less than the actual value. Outperforming expectations caused the stock price to increase nearly 10% after hours.

2021 Outlook

In 2021, Pinterest has no plans of slowing down; at least not in the first quarter. Pinterest primarily sees international growth opportunities, highlighting Latin America as its geographic expansion focus while continuing to expand its presence in existing international markets. These expansion efforts are aided by the movement to online shopping caused by the ongoing pandemic.

 

“Our current expectation is that Q1 revenue will grow in the low-70% range year over year”

 

This is good news for investors. As the Covid-19 pandemic continues to affect the world, Pinterest’s value will only increase. During this time, Pinterest can continue to build a loyal user base that will hopefully stick around even after the pandemic is over. It is unlikely that Pinterest will see over 250% gains in its share price in 2021, as it did in 2020, but it is still a good company to consider having in your portfolio

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