Social media platform Pinterest (NYSE:PINS) stock has surprised the markets blowing away analyst expectations even after the heads up from Snap Inc (NYSE:SNAP) earnings. The platform grew its global users to over 442 million. The visual discovery platform where people post up inspirational ideas and product hacks with personal recommendations is rapidly transforming into an eCommerce and marketing powerhouse. The nonintrusive and non-encroaching nature of the platform has made it trustworthy among users and sticky among businesses and advertisers. While Pinterest is clearly a pandemic benefactor, concerns about its stickiness in light of COVID-19 FDA vaccine approvals have been alleviated. The ecosystem works seamlessly to naturally “influence” its members and consumers by appealing to their preferences with a supportive soft sell rather than an in your face suggestive hard sell, like those annoyingly creepy Google (NASDAQ:GOOGL) banner ads promoting items based on your keyword searches. Prudent investors looking to gain exposure can look for opportunistic pullback price levels on shares.
Q3 FY 2020 Earnings Release
On Oct. 128, 2020, Pinterest released its fiscal third-quarter 2020 results for the quarter ending September 2020. The Company reported an adjusted earnings-per-share (EPS) profit of $0.13 excluding non-recurring items versus consensus analyst estimates for a profit of $0.03, beating estimates by $0.10. Revenues surged by 58.2% year-over-year (YOY) to $442.62 million beating analyst estimates for $386.29 million. Global monthly active users (MAUs) grew 37% YoY to 442 million. The Company raised its Q4 2020 revenue guidance by 60% at $638.4 million versus $552.01 million consensus analyst estimates.
Conference Call Takeaways
Pinterest CEO, Ben Silberman, highlighted their growth initiatives, “We’re seeing a number of our investments paying off, like growing our international presence in places like Western Europe, in our progress with automation to make it easier for small and medium-sized advertisers, and finally making Pinterest more shoppable.” The Company rolled out a number of new tools to empower retailers to reach more customers for the Holiday shopping season and beyond. The Company generated a positive 21% adjusted EBITDA margin. While MAUs grew double digits in all major regions, young users used Pinterest for inspiration and customized backgrounds, which the Company estimates drove 4 million incremental MAUs globally. The auto bid was a notable growth driver for small and medium-sized businesses in the quarter as their international business grew 145% YoY, representing 16% of total sales, up from 10% in prior Q3 2019. The Company continues to, “invest opportunistically to best serve pinners, merchants and advertisers.” Pinterest saw advertising demand snap back in the quarter notably from brand advertisers and larger retailers that previously paused spent in Q2. Interesting to note the comment from Pinterest CFO, Todd Morganfield, “Advertisers tell us that Pinterest is brand safe relative to other consumer internet platforms.” This resulted in Pinterest gaining from the advertiser social media platform boycotts starting in July seen by its competitors.
Analyst Upgrades
Analysts came out of the woodworks to upgrade Pinterest shares on Oct. 29, 2020. JP Morgan Chase & Co. (NYSE:JPM) raised PINS to Overweight with a $75 price target, up from $57, citing GDP growth leading to more ad spend. MKM Partners upped to a Buy with a $66 price target, up from $35. Pivotal Research Group reiterated their Buy rating with a $75 price target, up from $44.50. Pivotal noted that the Q4 2020 guidance raise may even be conservative. It’s $75 price target is based on 13X 2022 estimated revenues. Pinterest is a dual narrative play that grew its user base during the pandemic and benefiting from the advertising rebound during the economic recovery.
PINS Opportunistic Pullback Levels
Using the rifle charts on the weekly and daily time frames provides a precision near-term view of the landscape for PINS stock. The weekly rifle chart has been in a non-stop uptrend driven by stochastic mini pups since the $20s. The weekly stochastic is still pinned above the 80-band with a rising 5-period moving average (MA) support at $61.17. The daily rifle chart is in a pup breakout and triggered another market structure low (MSL) above the $60.55 Fibonacci (fib) level after its Q3 earnings reaction. Nimble traders can trade the reversions off opportunistic pullback levels at the $62.23 fib, $60.55 daily MSL trigger/fib, $57.77 and the $53.74 fib. Keep in mind that shares are in a momentum breakout and higher-priced pullback levels are more accommodative for nimble traders with smaller holding times. Lower priced are more accommodative for prudent investors with a longer holding time horizon. It’s prudent to watch the price action with peers SNAP, Twitter (NYSE:TWTR) and Facebook (NASDAQ:FB)