What Happened: Shares of social commerce platform Pinterest (NYSE: NYSE:PINS) jumped 8.14% in the morning session after the company reported third-quarter earnings with revenue exceeding Wall Street's expectations. The strong topline result was driven by better-than-expected growth in monthly active users. Its adjusted EBITDA and EPS also topped estimates.
Pinterest also provided some good news on the macro backdrop, saying that advertiser spending on its platform has been relatively resilient so far in the quarter. This is in contrast to what peer Snap said about the advertising market.
Lastly, revenue guidance for the next quarter was impressive. The company is anticipating 12% year on year revenue growth, which outpaced Consensus estimates. Overall, it was a good quarter, showing that the company is staying on track.
Following the results, Bank of America upgraded the stock's rating from Neutral to Buy and set a price target of $37. The price target indicates a potential 30% upside from when the upgrade was announced.
Is now the time to buy Pinterest? Find out by reading the original article on StockStory.
What is the market telling us: Pinterest's shares are somewhat volatile and over the last year have had 16 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was six months ago, when the company dropped 12.8% on the news that the company reported first-quarter revenue that narrowly beat analysts' forecasts, and earnings per share (EPS) also exceeded expectations. However, Domestic MAUs slightly missed expectations and growth was tepid. Pinterest expects that Q2 revenue will grow roughly in-line with what they saw in Q4 2022 and Q1 2023, which translates to 4-5% y/y growth. This missed expectations of roughly 6% y/y growth in Q2 2023 revenue. In addition, Pinterest expects Q2 non-GAAP operating expenses to grow low teens on a percentage basis quarter-over-quarter. This implies an operating profit guidance miss vs. expectations, which is another major negative.
Pinterest is up 30.1% since the beginning of the year, and at $29.78 per share it is trading close to its 52-week high of $30.31 from July 2023. Investors who bought $1,000 worth of Pinterest's shares at the IPO in April 2019 would now be looking at an investment worth $1,220.
