Winner in Social Media Space By TipRanks
Pinterest (NYSE:) was one of the most sought-after stocks in 2020. However, Wall Street appears to be increasingly growing cautious about the company’s capacity to retain pandemic-era users.
Pinterest’s active user count exploded last year as people remained at home and used social media to connect with them. Pinterest saw a boost in online commerce and advertising spend, which was unexpected.
Experts suggest it is time to avoid PINS stocks, as the growth rate for users has slowed. Businesses can’t keep growing at insanely high rates for ever. Saturation eventually sets in, and growth stocks succumb to their success.
PINS stock is a prime example of this view. It has fallen more than 20% year to date. From a growth perspective Pinterest is losing investor attention to other giants like Snapchat (SNAP), Facebook (NASDAQ) and Twitter (NYSE).
Pinterest analysts do not recommend that the stock be sold despite these poor results. According to analysts, PINS stock’s average target price is 35%. This potential return is far higher than its peers and it is well worth looking into.
To be clear, I believe in Pinterest stock. In fact, I tend to agree on this point with the analysts.
(See Pinterest stock charts on TipRanks)
An Inspirational Platform
One of the key differentiating factors for Pinterest is its unique platform. Pinterest, like other large companies such as Snapchat or Facebook, is laser-focused to create a personal experience for every user. Pinterest is all about inspiring users and providing solutions for various problems.
It seems that when consumers follow images they like, it makes sense to have the ability to purchase said goods embedded on the platform. Pinterest’s ability monetize the platform is one of its greatest strengths.
Pinterest has been hard at work to improve its ARPU (average revenue per user) and this is reflected in the amount of effort it’s made recently. Unique image search strategies have been developed by the company. The algorithms use computer vision and machine learning to offer a recommendation engine to end users. It results in more precise and streamlined information flow for Pinterest users.
This is great news for Pinterest users, and it has also been a great success for Pinterest. Recent quarters have seen a rise in ARPU metrics and robust profit margins for the company. This growing ARPU metrics is what investors need to focus on.
A Great Platform for Advertisers
Advertising is the primary revenue driver for Pinterest. Advertisers have the opportunity to put their products and services before paying customers, just like other social media platforms. Pinterest is no different, as it does not take any commission on every transaction.
Pinterest is a great platform for businesses looking to promote and sell their products. Pinterest will benefit greatly from expanding its market share within this industry, which has so much potential.
Pinterest plans to expand its advertising reach by using machine learning and AI for automated consumer targeting. Pinterest’s ability to stretch the advertising budget of clients can guarantee repeat sales and higher spending.
Even some of the stock’s most skeptical analysts are impressed with this model. Pinterest has a tremendous chance to expand its advertising base over the long term and to further monetize its platform.
What do analysts think about Pins Stock?
As per TipRanks’ analyst rating consensus, PINS stock is a Moderate Buy. Six Buy recommendations are included in the 17 analyst ratings. There are also 11 Hold recommendations.
This stock has an average Pinterest price target of $70.87. The analyst price targets vary from $85 to $57 per share.
The idea of tying image sharing to retail purchases is one that may not have been evident to many investors in Pinterest in the past. The model has been very successful and Pinterest seems to only be in the beginning stages of its potential monetization.
PINS stock is being viewed by a greater number of investors than FB stock. The company has a tremendous growth potential and it is expected to grow over the long-term.
This stock is one that growth investors need to be monitoring at these levels.
Disclosure: Chris MacDonald didn’t hold any positions in the securities discussed in this article at the time it was published.
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