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Pinterest Surges on Strong User Numbers, Elliott Investment Statement

Stock Markets Aug 02, 2022 06:32AM ET
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© Reuters Pinterest Surges on Strong User Numbers, Elliott Investment; Analysts Upgrades on Attractive Risk/reward

By Senad Karaahmetovic

Shares of Pinterest (NYSE:PINS) are up over 18% after the company reported better-than-expected user numbers.

PINS reported an adjusted EPS of 11c on revenue of $665.9 million, which compares to the consensus of adjusted EPS of 14c on revenue of $665.5 million. Monthly active users (MAUs) came in at 433 million to beat the $429.1 million expectations.

For this quarter, Pinterest said it expects revenue growth in mid-single digits.

“For the full year, there is no change to our previous expense outlook of non-GAAP operating expense growth in the range of 35-40% year over year,” the company added.

Moreover, Pinterest shares were boosted by the statement issued by activist investor Elliott Investment Management.

“Pinterest is a highly strategic business with significant potential for growth, and our conviction in the value-creation opportunity at Pinterest today has led us to become the Company’s largest investor,” Elliott said in a statement.

A Susquehanna analyst upgraded PINS stock to Positive on attractive risk/reward.

“While the fundamentals are still a bit choppy and there remains a lot of work ahead, we believe the new CEO and activist oversight combined with doable bogeys and an undemanding valuation have skewed the risk/reward to the upside,” the analyst wrote in a client note.

An analyst from Citi hiked the price target by $1 to $25 on stabilizing MAU trends. However, the analyst remains cautious on PINS shares.

“While we are encouraged with MAU & advertising trends and its strong balance sheet with $2.7B of cash/equivalents, given the current macro-environment and greater ’22 investments, we maintain our Neutral rating,” he told clients in a note.

A Morgan Stanley analyst said that results and Q3 guidance “were better than feared”. The analyst listed 4 things he is eager to learn more about from the new management.

  1. How new management intends to better execute on these opportunities;
  2. How management intends to improve engagement trends;
  3. More info about PINS’ differentiated engagement the company intends to monetize; and
  4. More info about the planned review of the company’s investment profile.

PINS shares were down 45% YTD heading into the results.

Pinterest Surges on Strong User Numbers, Elliott Investment Statement
 

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