Pinterest, Inc. PINS is scheduled to report second-quarter 2024 earnings on Jul 30. The Zacks Consensus Estimate for revenues and earnings is pegged at $847.8 million and 28 cents per share, respectively.
Earnings estimates for Pinterest have improved from $1.34 per share to $1.46 for 2024 and from $1.66 per share to $1.76 for 2025 over the past 90 days.
PINS Estimate Trend
Zacks Investment Research
Image Source: Zacks Investment Research
Earnings Surprise History
The Internet content provider delivered a four-quarter earnings surprise of 38.8%, on average, beating estimates on each occasion. In the last reported quarter, the company pulled off an earnings surprise of 42.9%.
Zacks Investment Research
Image Source: Zacks Investment Research
Earnings Whispers
Our proven model predicts an earnings beat for Pinterest for the second quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is perfectly the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Pinterest currently has an ESP of +7.14% with a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Factors Shaping the Upcoming Results
Pinterest is witnessing greater engagement on the platform from its existing user base. The company’s focus on improving operational rigor and incorporation of sophisticated AI models to enhance relevancy and personalization is likely to generate incremental revenues. The company is also emphasizing building new ad tools and formats to help grow the scope of monetization on the platform. This will enable advertisers to measure the results and conversion rates, which will improve their decision-making.
In addition, Pinterest is taking various initiatives to bring more actionable content on the platform from a wide range of sources such as users, creators, publishers and retailers. This has resulted in a solid improvement in engagement metrics like sessions, impressions and saves across all regions. Healthy traction in emerging verticals like men’s fashion, auto, health and travel are tailwinds.
Rising engagement among Gen Z users is a positive factor as well. Management’s decision to increase the accessibility of mobile deep linking (MDL) products to more advertisers has improved shoppability on the platform. The MDL solution is well-suited for retailers who are aiming to drive more purchases through their mobile app. This has significantly boosted shopping ads revenue generation.
However, Pinterest expects operating expenses to increase substantially for expanding operations domestically and internationally, enhancing product offerings, broadening Pinner and advertiser base, expanding marketing channels, hiring additional employees and developing technology.
In addition, Pinterest faces significant competition from larger, more established companies such as Amazon, Facebook (including Instagram), Google, Snap and Twitter, which provide their users with a variety of online products, services, content (including video) and advertising offerings, including web search engines, social networks and other means of discovering, using or acquiring goods and services.
Story continues
Price Performance
Over the past year, Pinterest has gained 41% compared with the industry’s growth of 14.7%, outperforming peers like Snap Inc. SNAP but lagging Meta Platforms, Inc. META.
Zacks Investment Research
Image Source: Zacks Investment Research
Key Valuation Metric
From a valuation standpoint, Pinterest appears to be relatively expensive compared to the industry but below its mean. Going by the price/sales ratio, the company shares currently trade at 6.43 forward sales, higher than 2.39 for the industry but lower than the stock’s mean of 7.06.
Zacks Investment Research
Image Source: Zacks Investment Research
Investment Considerations
Pinterest is increasingly establishing a unique value proposition to advertisers that could provide a competitive advantage in the long haul. Through various innovations, it continues to dramatically improve the advertising platform, which presently appears to be one of the best ad platforms for consumer discretionary brands looking for new ways to reach customers and stretch smaller ad budgets.
The company’s focus on improving operational rigor and incorporation of sophisticated AI models to enhance relevancy and personalization is likely to bring long-term benefits. Pinterest is also emphasizing building new ad tools and formats to help grow the scope of monetization on the platform. This will enable advertisers to measure the results and conversion rates, which will improve their decision-making. The company has partnered with Amazon.com, Inc. AMZN to further capitalize on the commercial intent of its user base and increase shoppability on its platform.
However, increasing competition from other video-centric consumer apps is likely to adversely impact user engagement to some extent. High operating expenses to expand operations and incorporate the latest technological innovations are expected to dent its profitability.
End Note
Pinterest appears to be treading in the middle of the road, and new investors could be better off if they trade with caution. High operating expenses and price wars owing to competitive pressure from both established and smaller firms have further eroded its profitability. Consequently, it might not be prudent to bet on the stock at the moment.
However, Pinterest is witnessing solid net sales growth backed by strong user engagement across all regions. Enhancements in lower funnel solutions like MDL, shopping ads and API for conversions are providing a sustained return on investment to advertisers.
Through third-party ad integration with Google, Pinterest aims to introduce monetization opportunities in several unmonetized international markets. The uptrend in estimate revisions is encouraging, and long-term investors already owning the stock could stay put.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
Snap Inc. (SNAP) : Free Stock Analysis Report
Pinterest, Inc. (PINS) : Free Stock Analysis Report
Meta Platforms, Inc. (META) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
