Pinterest Share Forecast February 2022 – Time to Buy PINS?

Shares of image sharing and social media company Pinterest (NYSE: PINS) are in the green today after closing at $26.80 as of February 9th (19:59 EST). Pinterest shares look reasonably valued but aren’t a better investment than the market’s bigger blue-chip tech stocks according to analysts.  While it continues to increase its spending on new ad formats, some of those ads will generate lower revenue.

Pinterest – Technical Analysis

Pinterests’s financial statement indicates a market cap of $17.638 billion. Its revenue for 2021 was $2.58 billion with a profit margin of -7.58% compared to$1.68 billion in 2020. The company’s revenue increased by 20% year over year to $847 million, which topped estimates by $19 million. Adjusted net income grew by 15% to reach $339 million.

Oscillators such as Relative Strength Index (14)(39.32),  Stochastic %K (14, 3, 3)(29.82), Commodity Channel Index (20)(−66.53),  Average Directional Index (14)(30.82) and Awesome Oscillator(−5.53) are neutral. Moving averages such as Exponential Moving Average (10)(27.44),  Simple Moving Average (10)(27.23),  Exponential Moving Average (20)(29.03),  Simple Moving Average (20)(29.18) and Exponential Moving Average (30)(30.61) are indicating a sell action.

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Recent Developments

Pinterest’s core advertising business is well protected from Apple’s privacy changes on iOS. It relies on first first-party and contextual data instead of third-party data sources. According to the company’s reported revenue of $847 million for Q4. This was up 20% year over year (YOY) while global monthly active users (MAUs) decreased 6% YOY to 431 million. As of February 1^st, global MAUs reached $436.8 million.

The company’s U.S. revenue grew 11% to $648 million, while international revenue grew 61% to $199 million. Management expects Q1 revenue to grow in the high-teens percentage range YOY. MAUs decreased 12% in the U.S. to reach 86 million and decreased 4% to 346 million in international markets. Pinterest is set to expand into three new Latin American markets as well as Japan, which will boost engagement.

The company also experienced seamless shopping on the platform as catalogue uploads were up over 100% YOY globally in Q4. Its EBITDA increased by 17% year over year to $351 million in the fourth quarter.  The company hasn’t provided a clear margin forecast for the first quarter. As it increases investments in its native content and expands its R&D, sales, and marketing teams, Pinterest expects its adjusted opening expenses to increase by 10% sequentially.

Should You Buy PINS Shares?

Investors remember how Pinterest’s pinboards soared throughout the pandemic as people stayed home and searched for more recipes, hobbies, do-it-yourself (DIY) projects, family activities and other activities. However, lockdowns eased which decelerated its growth. MAUs decreased from 478 million in the first quarter of 2021 to 431 million in the fourth quarter.

The slowdown in MAUs affected the company’s ability to transform into a “social shopping” platform with its Sponsored Pins, Idea Pins, native video content, and partnership with Shopify.DAU growth for Snapchat remained stable throughout the pandemic as well as in the post-lockdown market. It had 319 million DAUs in its latest quarter.

The company missed its revenue targets in the third quarter, due to underestimating the impact of Apple’s privacy update on its targeted ads. The company has since gained lost ground in the fourth quarter by reducing its dependence on third-party data.

Compared to many other blue-chip tech giants that trade at similar valuations, Snap is a weaker investment. This is primarily due to its slowing growth and shifts toward lower-revenue ad formats. Therefore investors should consider waiting for a few quarters before they invest in Pinterest shares and their volatile valuation.

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