Pinterest Inc

  • Exchange: NYSE
  • Ticker: PINS

Pinterest is a US-based social media company with a growing international opportunity.


Pinterest

February 14, 2021

Update - Talking about companies that over deliver, Pinterest has continued to execute. Since I mentioned it in stock ideas #4, Pinterest is up around 140%. After both its most recent earnings reports, the company popped around 10% with better than expected numbers. On Thursday, Pinterest announced revenue growth of 76%, a clear acceleration. US revenue grew 67%, whilst international grew 145%. Pinterest are benefiting from the general increased spend in digital marketing, as companies feel more optimism looking toward the future. Monthly active users grew 37%, continuing their steady trajectory. Average revenue per user (ARPU) was up 29% on average, but it’s useful to look deeper here. ARPU for US customers was $5.94. ARPU for international customers was just $0.35. Clearly, Pinterest has an opportunity to better monetise its international users, the fastest-growing segment of the business. Having said that, Pinterest is relatively early in its commercial efforts and also has a huge opportunity to increase its US ARPU. For comparison, Facebook’s ARPU for the US & Canada was over $50 last quarter. All of this is to say that Pinterest still has a large opportunity ahead. Whenever a company has risen by such a large amount in a short space of time, its tempting to think you’ve missed the chance. But with steady user growth, a growing international opportunity and opportunity for ARPU expansion, Pinterest is still a growth story. It’s been able to carve itself a niche in the digital marketing sphere, whilst avoiding much of the negative headlines attributed to Facebook or Google.

chart showing Pinterest ARPU development

Pinterest

August 16, 2020

Thesis - Pinterest allows users to create digital pinboards. The tool is used by over 400m people to collect images related to home design, weddings and creative projects. This is a business that has experienced apposing forces over the last 3 months. On the one hand, its user numbers have increased with monthly active users up 39% in Q2, up from 26% growth in Q1. On the downside, the business monetizes through advertisers and advertising in total has severely decreased as suffering firms cost cut. The benefits seem to be outweighing the downsides so far, with the stock price shooting up 27% after it’s last earnings call. Pinterest is interesting for a few reasons. First, it’s image-based boards are used around key life moments such as weddings and home improvement projects, which usually coincide with large increases and spend. Pinterest is well placed to capture some of that value. Second, they are still nascent in international markets with a large opportunity to grow. International revenue grew 72% year on year, mostly from a small base. Finally, unlike Twitter or Facebook they do not attract political statements or groups which can make those platforms hard to manage. For the most part, Pinterest is able to execute on its mission with minimal hassle. Currently valued at $20bn, this is a business that has carved itself a nice niche in the advertising space and has room to both grow its user base and double-down on monetization. Whilst not yet profitable, the company is gearing towards that in the coming years.