Pinterest Picked up a New CEO - Buy, Sell, Hold?

: PINS | Pinterest Inc. News, Ratings, and Charts

PINS – Social media company Pinterest (PINS) recently appointed online commerce expert Bill Ready as its Chief Executive Officer. The company has been prioritizing e-commerce in recent years, and this move is expected to help its commerce business gain momentum. However, considering the challenging macro environment, should you Buy, Sell or Hold the stock now? Let’s discuss this in detail….

Visual discovery engine company Pinterest, Inc. (PINS) enables people to discover and personalize visual content. It allows users to find inspiration for their lives, including recipes, style, home inspiration, DIY, and others; and provides video, product, and idea pins.

PINS’ shares surged last week following the news of long-time Chief Executive Officer Ben Silbermann stepping down, handing over the reins to Google commerce executive Bill Ready. Investors are expecting a deeper push into e-commerce through this transition. Silbermann will retain his board seat as executive chairman.

“In our next chapter, we are focused on helping Pinners buy, try and act on all the great ideas they see. Bill is a great leader for this transition. He is a builder who deeply understands commerce and payments,” Silbermann said.

The company had earlier stated its plans to prioritize e-commerce apart from its advertising-based business model. Moreover, last month, PINS announced the completion of its acquisition of THE YES, an AI-powered shopping platform for fashion that enables users to shop a personalized feed based on the user’s active input on brand, style, and size.

The company expects this acquisition to accelerate its vision for it to be the home of taste-driven shopping.

Bill Ready was previously in charge of Google’s commerce business and was the executive vice president and chief operating officer of PayPal earlier. He brings his expertise in fintech and e-commerce, which is expected to boost PINS’ capabilities.

PINS shares are down 75.4% over the past year and 45.7% year-to-date to close the last trading session at $19.73.

Here’s what could shape PINS’ performance in the near term:

Macro Headwinds Hamper Growth

For the fiscal first quarter (ended March 31, 2022), PINS’ revenues increased 18.5% year-over-year to $574.89 million. However, its non-GAAP net income was $68.99 million, down 12.1% year-over-year, and its non-GAAP EPS came in at $0.10, down 9.1% year-over-year. Also, its adjusted EBITDA decreased 8.4% from the prior-year quarter to $76.80 million.

The company has been struggling with decreasing monthly active users as the pandemic-induced popularity started waning, with people increasingly engaging in outdoor activities. PINS’ global monthly active users decreased 9% from the year-ago period to 433 million. The company attributed the fall to pandemic growth in the 2021 quarter and lower search traffic due to Google’s algorithm change at the end of last year.

Moreover, PINS stated that its revenue growth was offset by macro headwinds, including supply chain issues and other factors, which impacted its CPG advertisers and some mid-market advertisers. “In Europe, Russia’s invasion of Ukraine compounded a difficult macro environment, impacting many of our advertisers in that region,” the company said.

Lower Bottom-Line Expectation

Analysts expect PINS’ revenue to increase 10% year-over-year to $674.50 million in the fiscal second quarter (ended June 2022). Also, its revenue is expected to grow 14.9% in the ongoing quarter ending September 2022 and 15.7% in the fiscal year ending December 2022.

However, the consensus EPS estimate of $0.89 for the current year indicates a decline of 21.1% year-over-year. Also, its EPS is expected to decrease 26% in the quarter (ended June 2022) and 33.3% in the ongoing quarter.

Impressive Profit Margins

PINS’ gross profit margin of 79.69% is 57.1% higher than the industry average of 50.74%. Also, its net income margin of 12.48% is 155.1% higher than the industry average of 4.89%.

PINS’ ROE, ROA, and ROTC of 12.26%, 9.35%, and 8.55% compare with the industry averages of 5.39%, 2.29%, and 3.51%, respectively.

POWR Ratings Reflect Uncertain Prospects

PINS has an overall rating of C, translating to Neutral in our proprietary POWR Ratings system. The POWR Ratings are calculated considering 118 distinct factors, with each factor weighted to an optimal degree.

The stock has a grade of C for Value, consistent with its mixed valuation. In terms of forward P/E, PINS is trading at 63.23x, 253.6% higher than the industry average of 17.88x. However, its forward non-GAAP PEG of 0.41x is 68.9% lower than the industry average of 1.32x.

PINS has a D grade for Sentiment. Bleak EPS growth estimates for the coming quarters justify this grade.

Of the 65 stocks in the Internet industry, PINS is ranked #13.

Beyond what I have stated above, you can also view PINS’ grades for Quality, Growth, Momentum, and Stability here.

View the top-rated stocks in the Internet industry here.

Bottom Line

Although the company is expected to benefit from the leadership change, Baird’s Colin Sebastian said, “near-term trends are likely to remain choppy.”

On the other hand, Rosenblatt Securities analyst Barton Crockett thinks that Ready’s lack of experience in growing social media audiences could be PINS’ most significant challenge now.

So, it could be wise to wait and see how the CEO switch helps improve PINS’ growth trajectory amid the challenging macro environment before investing in the stock.

How Does Pinterest, Inc. (PINS) Stack Up Against its Peers?

While PINS has an overall POWR Rating of C, you might want to consider taking a look at its industry peers, Yelp Inc. (YELP), which has an A (Strong Buy) rating, and trivago N.V. (TRVG) and Travelzoo (TZOO), which have a B (Buy) rating.

PINS shares rose $0.22 (+1.12%) in premarket trading Thursday. Year-to-date, PINS has declined -45.72%, versus a -18.71% rise in the benchmark S&P 500 index during the same period.

About the Author: Subhasree Kar

Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics. More...

More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
PINSGet RatingGet RatingGet Rating
YELPGet RatingGet RatingGet Rating
TRVGGet RatingGet RatingGet Rating
TZOOGet RatingGet RatingGet Rating

Most Popular Stories on

Is This REALLY a Bull Market?

The S&P 500 (SPY) keeps making record highs...but does that mean that market conditions are truly bullish? 44 year investment veteran shines a light on how hollow recent gains are as they are only accruing to a handful of stocks with most investors searching high and low for stock market gains. Read on for more...

Unveiling Adobe (ADBE) Q2 Earnings: What Lies Ahead for Investors?

Software giant Adobe Inc. (ADBE) has released its second-quarter earnings, revealing double-digit growth in both revenue and profits. Yet, concerns arise around the complexities of navigating growth in the face of advancing AI technologies. Let’s analyze ADBE’s recent performance and assess key fundamentals to uncover what lies ahead for investors…

3 AI Stocks to Invest in for the Next Technological Revolution

The AI market is experiencing a significant growth trajectory, driven by widespread application across various industries. Hence, it could be wise to invest in top AI stocks, Alphabet (GOOGL), Meta Platforms (META), and Alibaba Group Holding (BABA) for the next technological revolution. Read more...

Analyzing Broadcom’s (AVGO) Q2 Earnings: Worth Investing?

Driven by a surge in demand for its AI products, Broadcom (AVGO) reported robust earnings in its latest quarterly results, exceeding expectations on both top and bottom lines. However, is the stock’s recent announcement of a 10-for-1 stock split worth investing in? Keep reading to find out…

Bullish or Bearish Stock Set Up?

The S&P 500 (SPY) record highs sounds pretty darn bullish on the surface. Yet as we dig below the surface there are some curious signals that point more Risk Off. This is especially true as we come into the next Fed meeting after a round of data that points to inflation still being too high...only further delaying the first rate cut. What does this all mean for stocks from here? Steve Reitmeister offers his latest views on the market outlook along with a preview of his top picks to stay on step ahead of the market. Read on for more...

Read More Stories

More Pinterest Inc. (PINS) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All PINS News