Pinterest stock experienced a decline as the social media giant revealed lower fourth-quarter revenue than anticipated. However, Wall Street analysts remain optimistic, identifying potential growth factors.
Mixed Fourth-Quarter Results but Promising Outlook
Despite reporting mixed results for the fourth quarter, Pinterest achieved an all-time-high in monthly active users. Additionally, the company’s partnerships with Google and Amazon.com are gaining momentum, providing further opportunities for growth. Citi analyst Ronald Josey noted these positive developments in a research note, recommending that investors capitalize on any stock market disruptions.
Strong Buy Rating and Target Price
Ronald Josey rates Pinterest as a Buy with a price target of $48. The premarket trading on Friday saw Pinterest shares drop by 8.5% to reach $37.20. Over the past 12 months, however, the stock has demonstrated a 64% increase in value.
Comparable Social Media Stocks Perform Modestly
While Pinterest faced a decline, other social media stocks experienced modest gains. Snap saw a 0.8% rise, while Meta Platforms observed a 0.6% increase.
Advertising Partnership with Google
Pinterest recently announced an advertising partnership with Google during its earnings conference call on Thursday. The collaboration aims to monetize several currently unmonetized international markets by allowing ads to be served on Pinterest through Google’s Ad Manager. Although this partnership did not significantly contribute to fourth-quarter revenue, it is expected to have a positive impact in the future.
Social Media App Reports Strong Fourth-Quarter Earnings
The social media app has announced its fourth-quarter earnings, with a reported 53 cents a share on revenue of $981.3 million. While analysts were expecting slightly higher earnings of 52 cents a share on revenue of $991 million, the app still managed to surpass expectations.
Increase in Global Monthly Active Users
One of the highlights of the quarter was the significant growth in global monthly active users, which saw an 11% increase to 498 million. This exceeded the consensus call for 487 million users, indicating a strong user base and continued popularity of the app.
Encouragement from an Ad Partnership with Google
The announcement of an ad partnership with Google has boosted confidence among analysts. Mark Zgutowicz, an analyst from Benchmark, expressed his optimism about this collaboration. He believes that it will address one of his main concerns, which is the app’s previous difficulty in capitalizing on its user base.
Looking Beyond Revenue Miss
Despite falling slightly short on revenue expectations, Justin Patterson, an analyst from KeyBanc Capital Markets, remains positive about the app’s prospects. He highlights several factors that contribute to his optimism: the remarkable increase in monthly active users, the earlier-than-expected Google partnership, projected growth throughout 2024, and ongoing margin improvement.
Overall, the app’s fourth-quarter performance indicates a strong foundation for future growth and potential monetization opportunities.