- PINS stock has been hammered the last year, especially the last few months
- New features should draw good reviews
- If peace comes to Europe, Pinterest should benefit
Pinterest (NASDAQ:PINS) stock has been hit hard by the Russian-Ukrainian war.
Just since the start of 2022 shares are down 37%. It was due to open March 16 at about $23.50, a market capitalization (cap) of $15 billion on 2021 sales of almost $2.6 billion. Shares have fallen despite the company making $326 million last year on revenue growth of 52%.
Before the war started, I looked at that performance and recommended the stock. I saw it as a great way to ride the next growth wave. Given events since, I was wrong.
If the latest moves in Ukraine lead to peace, this is one of the names you want to be holding.
| PINS | $24.25 |
The Baby and the Bathwater
Pinterest was one of those growth stocks that were tossed aside indiscriminately in 2021. It reminded me of the old saying about throwing the baby out with the bathwater.
Most analysts are still on the sidelines. Tipranks currently counts just seven of 24 recommending it.
When a stock is falling, bears look for any excuse to dismiss it. In the case of Pinterest, the monthly average user number is declining as it seeks to make money from those users it has. The number peaked at 478 million at the start of the year and fell to 431 million by its end.
But this is misleading. As I noted in September the average user outside the U.S. is worth just 36 cents to Pinterest. It makes little sense to go after raw user numbers if they’re not worth serving.
Pinterest tried to address its international Average Revenue Per User (ARPU) number by focusing on a few markets, like Mexico and Brazil, and adding in-app shopping in those markets. The move may have been premature, given the slowing global economy.
All the Right Moves
Pinterest has also been making some technology move aimed at increasing engagement.
It’s allowing creators to export video created with its new video format to other sites. E-commerce is an increasingly visual medium, but it’s expensive to make different videos for different sites.
Critics say it’s trying to be like TikTok to which I say, what’s wrong with that? TikTok videos represent the state of the art in presentation. I’d rather have them made on my site, and export them, than lose the engagement of creatives.
Pinterest is also trying a little augmented reality with Try On for Home Décor. Users can photograph their rooms and see how furniture looks in them. It’s an extension of technology previously applied to beauty products.
The new feature also debuts with support from major retailers like Crate & Barrel, Target (NYSE:TGT), Walmart (NYSE:WMT), and Wayfair (NYSE:W). Drawing the interest of big retailers is another big piece of the strategy. Estee Lauder (NYSE:EL) has just launched its first idea ad campaign on the site.
Conclusion on PINS Stock
Not all growth stocks are worth buying yet. But those with a clue about making a profit are worth nibbling on.
PINS stock is one such a stock.
Shares have a long way to go to hit their previous heights. Pinterest shares cost over $70 each a year ago. But long-term investors who have been in the name for two years are still up 68% at the stock’s current price.
The company’s turnaround, and the interest it’s getting from major retail players, could also draw buyout interest. The price to earnings multiple currently looks high at 49, but rising earnings could make that look cheap to a Target or a Walmart. That spells downside protection.
On the date of publication, Dana Blankenhorn held no positions in companies mentioned in this story. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.