Pinterest Shows Promising Growth, but Faces Stiff Competition
Pinterest, Inc. (PINS) has seen a positive trend in earnings estimates thanks to a strong business model. Over the past 60 days, earnings estimates for Pinterest for 2024 have risen by 4.1% to $1.51, while estimates for 2025 have increased by 2.3% to $1.77. These revisions suggest a favorable outlook for the stock’s growth potential.
Image Source: Zacks Investment Research
Pinterest’s Unique Market Position
Increased user engagement has helped Pinterest carve out a unique spot in the digital marketplace. The platform attracts users seeking inspiration and information on topics like weddings and fashion, rather than specific products. This discovery-focused approach offers advertisers a valuable opportunity to connect with potential customers who are open to purchasing.
Pinterest aims to enhance its advertising appeal, establishing a competitive edge for the future. The company continues to innovate its ad offerings, making Pinterest a prominent platform for consumer discretionary brands. Its Verified Merchants Program helps brands showcase shoppable products directly within the app and utilize re-targeting capabilities more effectively.
Pinterest is also working on integrating actionable content from various sources, including users and retailers. This focus has led to significant improvements in user engagement metrics across the board, with notable growth in sectors like men’s fashion and travel.
Moreover, Pinterest’s push to make its mobile deep linking products available to more advertisers has increased shoppability, driving revenue from shopping ads.
Advancements in AI Support Growth
The company’s dedication to improving operations through advanced AI models will likely yield long-term advantages. Pinterest is also focused on developing new advertising tools and formats that will broaden monetization opportunities. These enhancements will enable advertisers to effectively measure their results and refine their strategies. A partnership with Amazon.com, Inc. (AMZN) has been established to tap into the commercial intent of Pinterest’s user base, thus enhancing the shopping experience.
The recent acquisition of The Yes, a high-tech fashion-shopping platform, allows Pinterest to align its features with customer tastes and streamline the shopping process. This collaboration aims to enrich the platform with video and live stream content, making it easier for customers to find and buy products.
Pinterest’s Stock Performance
Despite these positive developments, Pinterest’s shares have fallen by 17.1% over the past year, while the industry as a whole has grown by 49.6%. While Pinterest has outperformed peers like Snap Inc. (SNAP), it has not kept pace with Meta Platforms, Inc. (META).
PINS Stock One-Year Price Performance
Image Source: Zacks Investment Research
Challenges Ahead for Pinterest
Pinterest anticipates that operating expenses will rise significantly as it expands both domestically and internationally. This expansion will include enhancing product offerings, growing its user and advertiser base, increasing marketing efforts, and developing new technologies. Consequently, the cost of revenues is likely to climb as infrastructure spending increases to support user growth.
Furthermore, Pinterest is competing against major players like Amazon, Facebook, Google, and Twitter, all of which provide diverse online products and services. Smaller competitors, such as Allrecipes and Tastemade, also present challenges by offering engaging content and shopping opportunities.
Image Source: Zacks Investment Research
Conclusion
Pinterest is experiencing solid net sales growth, fueled by strong user engagement across different markets. Innovations in lower-funnel solutions like mobile deep linking (MDL) and shopping ads are generating consistent returns for advertisers. By partnering with Google, Pinterest is working to unlock new monetization avenues in untapped international markets. The recent upswing in estimate revisions indicates positive sentiment surrounding the stock.
However, competition from video-centric platforms could challenge Pinterest’s user engagement. Rising operational costs associated with new technology implementations may also impact profitability. With a Zacks Rank of #3 (Hold), Pinterest appears to be in a cautious position, encouraging investors to proceed carefully. You can view the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Free Report: 5 Clean Energy Stocks with Massive Upside
Energy remains a foundational part of the economy, a multi-trillion dollar industry that has birthed many large companies.
Today, cutting-edge technology is enabling clean energy sources to rival traditional fossil fuels. There’s significant investment pouring into clean energy initiatives, ranging from solar to hydrogen fuel.
Investors should keep an eye on emerging leaders in this space, as they could represent exciting growth opportunities.
Download “Nuclear to Solar: 5 Stocks Powering the Future” to discover Zacks’ top picks for free today.
Want the latest recommendations from Zacks Investment Research? Today, you can download “5 Stocks Set to Double”. 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
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
