We came across a bullish thesis on Pinterest, Inc. (PINS) on Long-Term Pick’s Substack by Dan. In this article, we will summarize the bulls’ thesis on PINS. PINS Technologies, Inc. share was trading at $30.46 as of Sept 23rd. PINS’s trailing and forward P/E were 105.03 and 17.01 according to Yahoo Finance.
Pinterest operates in the digital advertising space wherein it inspires users to shop and make decisions in purchasing goods and services in turn driving advertising revenue. Pinterest is a platform that is a blend of social media and e-commerce through which it targets users in the discovery phase of the end-user’s purchasing journey, it charges advertisers with the help of various ad formats such as cost per click (CPC), cost per thousand impressions (CPM) and cost per view (CPV) for video ads. Pinterest mainly competes with Snapchat, Meta, TikTok, Alphabet, and Reddit.
Pinterest has a strong growing user engagement with 522 million monthly active users out of which 40% of the users are Gen Z, they focus on video content and AI-powered tools like “The Yes” to bolster their user engagement and shopping experience. Pinterest has been focusing on enhancing its advertisement capabilities, and e-commerce capacity with the help of the strategic partnership it established with Amazon.
Pinterest has the ability to attract a large user base growing 12% YoY that comes to the platform to discover new products or ideas, this intent-driven user behavior is very useful to advertisers as they have higher engagement rates thus leading to a higher conversion rate enabling Pinterest to charge a premium for its services. Pinterest earned ARPU of $6.85 from the U.S. and Canada. CFO in the first six months of 2024 was $462.6 Million. Pinterest expects that in Q3 of 2024, revenue would be between $885-900 Million representing a 16-18% YoY growth, they also expect operating margins to expand to 22% by 2028.
Analysts are also bullish forecasting strong growth with sales reaching $4.91 Billion by FY2026. We can expect a median price target of $43.50 which is 40% upside and the high estimate suggests a 67% gain. In conclusion, we can say that Pinterest is a buy given its future outlook, healthy financial outlook and, and robust cash flow generation capacity.
Pinterest, Inc. is also not on our list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 61 hedge fund portfolios held PINS at the end of the second quarter which was 64 in the previous quarter. While we acknowledge the risk and potential of PINS as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than PINS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.