Pinterest Share Price Forecast August 2021 – Time to Buy PINS?
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Shares of Image sharing social media platform Pinterest (NYSE: PINS) are in the red today, closing at $56.10 as of August 17th at 19:59 UTC-4. The company has had almost 1/5th of its market valuation wiped away after releasing its second-quarter earnings, which indicated that the company has reached saturation in its main market.
Pinterest – Technical Analysis
According to the financial statement released by Pinterest, the company’s current market cap is at $36.16 billion with total assets worth $2.886 billion. Pinterest’s revenue for 2020 was at $1.69 billion up from $1.14 billion earned in 2019.
Moving averages for Pinterest such as Exponential Moving Average (100)(67.79), Simple Moving Average (100)(69.16), Exponential Moving Average (200)(64.26) and Simple Moving Average (200)(70.13) are indicating a strong sell action. Oscillators such as Stochastic %K (14, 3, 3)(4.33), Commodity Channel Index (20)(−67.72) and Average Directional Index (14)(39.73) and Awesome Oscillator(−12.06) are all neutral.
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Recent Developments
Pinterest’s monthly active users are on the decline even since April when it recorded 478 million active users. Its worst day of trading to date was on March 16th, 2020 amid the covid-19 lockdowns where it closed down 18.7%. The company’s reported revenue increased by 125% in 2021’s second quarter to $613 million, caused by large advertisers returning to the market en masse. International advertisers returned to the platform, accounting for 22% of its total revenue. It ended up with a profit of $69 million profit compared to 2020’s loss of $100 million.
However, Pinterest’s users fell by 5% to 91 million in the quarter, which is an indication that most of this came from bored women during the pandemic. Pinterest’s Gen-Z users grew at double-digit rates in the quarter which were assisted by the Idea Pins tutorials it introduced. However, some other pandemic winners such as Wayfair has lost more than 10% in sales, which have stoked similar fears for Pinterest.
Should You Buy PINS Shares?
Investors interested in Pinterest must realise that the water is pretty turbid for the company, which expects its revenues to decrease to the low 40% range in 2021’s third quarter. Monthly active users for Pinterest were down by 7% at the end of July when it released its earnings report. Due to a lack of clarity the company cannot predict the next quarter’s monthly active users. Additionally, the company is planning a big change in delivering user experience which is expected to eat up some revenue. There is a high chance that the company will lose some advertising inventory temporarily but hopes to regain the lost user engagement in the future. Thus, the introduction of a new business model that offers no guarantee of success along with a potentially saturated home improvement market does not bode well for PINS share price.
While the pandemic added tremendous value to Pinterest, it’s now seeing a letdown. However, the platform’s monthly active users are up by 51% compared to what they were in 2019. While year-over-year figures are indicating that the company’s growth has stalled, it is still expanding if we see consider the two-year stack. However, the company is right now in uncharted territory as it looks for a new way to engage with users. Even after declining, PINS shares traded at more than 200x trailing earnings. Thus investors interested in PINS should wait for proof of how beneficial the new engagement policy is to the company, by which time they would also get a better price for the shares.
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