3/26/2023 0 Comments Pins stock![]() For 2022, the same trend: a move from 95 cents to $1.25. As noted, the consensus estimate now is at 85 cents. Before the Q4 release earlier this month, Wall Street saw 2021 EPS of 64 cents. It’s also a multiple that may come down in a hurry as those estimates rise. But it’s a multiple Pinterest can grow into. So, yes, the forward P/E multiple looks big. In that scenario, PINS stock doesn’t look expensive at all. Get that international ARPU figure to $4 or $5 and, all else equal, Pinterest revenue nearly doubles. Again, Pinterest is getting less than $1 per year from its international base, which accounts for almost 80% of its users. That trend doesn’t stop two years from now. In 2022, revenue is projected to increase 36%, with EPS climbing 47%. For 2021, the Street sees revenue growth shy of 50%, with EPS more than doubling. ![]() The same trend plays out in Wall Street estimates. Full-year profit growth (adjusted net income rose almost 1,500% year-over-year) is inflated by the fact that Pinterest was only narrowly profitable in 2019. ![]() It’s more expensive to acquire new advertisers, admittedly, but once acquired those extra sales too are highly profitable. That is to say, a large share of additional revenue turns into earnings.Īdditional users don’t cost Pinterest very much, but they add to advertising revenue (more users means more views means more money). Platform businesses like Pinterest have high incremental margins. What’s importance about monetization is that it doesn’t just affect revenue. It’s the monetization of those users that’s the big opportunity. American users were more than 17x as valuable.Īgain, the user growth is great. Outside the U.S., the average user provided just 88 cents in revenue for the entire year. That’s huge improvement – but there’s still a long, long way to go. Fourth quarter growth was even better, at 29%. That figure rose 12% year-over-year in 2020. In 2019, Pinterest’s global ARPU (average revenue per user) was just $3.81. But monetization of those users is increasing as well. Yes, user growth is tremendously impressive. What we see in Pinterest’s 2020, beyond the user growth, is precisely these improvements playing out. It even takes time to hire and train a sales force, and then fine-tune its efforts. Most importantly, new platforms have to convince advertisers to migrate their spend from television or print or even other platforms. In addition, it takes time for social media companies to turn users into revenue. That’s true for Pinterest: co-founders Ben Silbermann and Evan Sharp, who still lead the company, were both 37 when Pinterest went public. That trend makes some sense.įor one, most of these companies are relatively young, with relatively young management teams. There are early disappointments, followed by huge rallies. Pinterest stock actually began last year about 1% below its initial offering price of $19 per share.īut we’ve seen the same trend play out with every major social media stock. ![]() Growth was solid, but not quite where investors hoped. Fourth-Quarter EarningsĪs I’ve noted before, heading into 2020 Pinterest was stumbling a bit. The growth that base can drive is why PINS stock looks expensive, and why the stock still remains a buy. In fact, at 459 million, Pinterest’s MAU base incredibly is about 6% of the world population. They’re going to stick around for the long haul. They’ve gone through the sign-up process, and established their pins and home feeds. Those users have seen the value of Pinterest. Here’s the thing: those users aren’t going to suddenly disappear once normalcy returns. Pinterest provided the perfect platform for both trends. Stuck-at-home consumers needed to do more online shopping as well as find new hobbies. Obviously, the novel coronavirus pandemic played a role in that growth. That’s how many monthly active users Pinterest added in 2020. That forward price-to-earnings multiple is one of the highest among social media stocks.īut there’s another number worth focusing on: 124 million. It’s valued at about 69x the consensus analyst estimate for earnings per share next year. Source: Nopparat Khokthong / Īfter that rally, PINS stock seems to trade at a nosebleed valuation.
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