Pinterest (PINS) stock plunged more than 14% out of the gate Friday after the do-it-yourself (DIY) social media platform beat top- and bottom-line expectations for its third quarter but provided an outlook for its fourth quarter that failed to impress.
In the three months ended September 30, Pinterest's revenue increased 17.7% year over year to $898 million, boosted by a more than 11% rise in global monthly active users to 537 million. Its earnings per share (EPS) were up 48.2% from the year-ago period to 40 cents.
"We delivered another strong quarter with users reaching another all-time high of 537 million and revenue growth at 18%," said Pinterest CEO Bill Ready in a statement. "Our artificial intelligence (AI) investments are driving results by powering better personalized experiences and greater performance for advertisers, with our lower-funnel ad tools being the fastest-growing part of our business. Advertisers are increasingly relying on Pinterest to engage our growing audience who see us as a great place to find inspiration, curate and shop."
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The results beat analysts' expectations. Wall Street was anticipating revenue of $896 million and earnings of 34 cents per share, according to CNBC.
However, sentiment turned negative toward Pinterest when it provided its outlook for the fourth quarter. The company expects to achieve revenue in the range of $1.125 billion to $1.145 billion, representing growth of 15% to 17% from the year-ago period. The midpoint of this range, $1.135 billion, came up short of the $1.143 billion in revenue analysts are anticipating.
Is Pinterest stock a buy, sell or hold?
It's been a volatile year on the price charts for Pinterest. Indeed, shares were up more than 21% for the year to date back in June, but are currently down 20.6% since the start of January. Still, Wall Street remains bullish on the communication services stock.
According to S&P Global Market Intelligence, the average analyst target price for PINS stock is $41.92, representing implied upside of about 45% to current levels. Additionally, the consensus recommendation is Buy.
Not everyone is all in on the large-cap stock, though. Financial services firm Wedbush maintained its Neutral rating (equivalent to a Hold) on Pinterest after earnings, but raised its price target to $38 from $37.
"We think Pinterest is likely to achieve revenue growth closer to the range of its longer-term target (mid-to-high teens CAGR over the next 3–5 years)," says Wedbush analyst Scott Devitt. "That said, management continues to demonstrate strong execution against its user engagement and monetization strategy, with several early initiatives in place to drive growth over the intermediate-term."
For now, though, investors will debate the sustainability of high revenue growth against higher comparisons, the impact of more ads on user engagement, and headwinds from weakness in the food and beverage category, Devitt says.
Related Content
-
Here's How To Get Organized And Work For YourselfWhether you’re looking for a side gig or planning to start your own business, it has never been easier to strike out on your own. Here is our guide to navigating working for yourself.
-
How to Manage Risk With Diversification"Don't put all your eggs in one basket" means different things to different investors. Here's how to manage your risk with portfolio diversification.
-
What You Need to Know About Working For Yourself
Whether you’re looking for a side gig or planning to start your own business, it has never been easier to strike out on your own. Here is our guide to navigating working for yourself.
-
How to Manage Portfolio Risk With Diversification
"Don't put all your eggs in one basket" means different things to different investors. Here's how to manage your risk with portfolio diversification.
-
How Much Money Is Enough to Be Happy? Can You Have Too Much?The relationship between money and happiness is complicated, but the experts agree on these three eye-opening fundamentals.
-
Stock Market Today: Muted Inflation Data Sparks Relief RallyEncouraging news about the path of consumer prices sent risk assets soaring again.
-
What Can Accredited Investors Do?As an accredited investor, you will have access to a more diverse pool of investment options. Here's what you need to know.
-
Five Year-End Strategies You Can't Afford to MissInstead of making New Year's resolutions, consider making some money moves that could help save you big bucks on your taxes.
-
Buying an Insurance Policy: Three Ways to Do ItYou can buy an insurance policy through an insurance agent or broker or on the internet. Which way works best for you?
-
Stock Market Today: The Dow Adds 15 Points To End Its Losing StreakEquity indexes opened higher but drifted lower as markets priced in new Fed forecasts.
