How many social media platforms Pinterest (NYSE: PINS) saw a surge in engagement in 2020 due to the COVID-19 pandemic, which forced people to stay home. As a result, Pinterest stock delivered outstanding gains of over 250% for investors last year.
At the same time, Pinterest differs relatively from other social media platforms, as Pinterest is predominantly a visual platform on which users can discover creative interests. The company has been largely isolated from privacy scandals plaguing other services like the industry leader Facebook (NASDAQ: FB).
The total number of Monthly Active Users (MAUs) increased 37% over the course of 2020 and rose to 459 million by the end of the year.
Stocks are now trading on the order of $ 79, or 25.4 times sales, as investors price in ambitious growth expectations for future business. Wall Street is bullish too, with an average analyst price target of $ 163.77, which ranges from a high valuation estimate of $ 220 to a low of $ 74.
Pinterest (NYSE: PINS)
Price: $ 75.88 (as of July 8, 2021)
Market capitalization: 48.325.010.100
Pinterest stock forecast 2021
The momentum Pinterest built in 2020 has continued through 2021, with MAUs increasing 30% to 478 million in the first quarter. That heightened engagement resulted in a 78% increase in revenue to $ 485 million while net losses shrink as Pinterest marches towards profitability.
Pinterest stopped providing full-year forecasts due to the ongoing macroeconomic uncertainties surrounding the pandemic and switched to a practice of instead providing quarterly forecasts as market conditions change. The company expects sales to grow 105% in the second quarter, with global MAUs growing in the mid-tens, while MAUs in its core US market will remain unchanged.
The company has set its strategic priorities for the year, which are mostly about content. Pinterest plans to refine the user experience (“pinner”) and focus on delivering better results to advertisers while broadening the foundation for e-commerce and shopping initiatives.
Pinterest stock forecast 2025
Analysts predict steady revenue growth for the coming years, albeit with a natural slowdown as the revenue base grows. Based on the Wall Street models, Pinterest could have a compound annual growth rate (CAGR) of over 23% by 2025.
Here are the current consensus estimates for Pinterest sales.
|2021||$ 2.58 billion||53%|
|2022||$ 3.45 billion||34%|
|2023||$ 4.75 billion||37%|
|2024||$ 5.94 billion||25%|
|2025||$ 7.3 billion||23%|
When it comes to Adjusted Earnings Per Share (EPS), Wall Street is currently looking for the following criteria.
|year||Adjusted EPS||Year-on-year growth|
While Pinterest’s MAU base is already sizeable, the platform still pales in comparison to some of the biggest social media sites. That suggests many possibilities if the company can grow to be of comparable size.
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Pinterest stock forecast 2030
For the remainder of the decade, analysts anticipate revenue of $ 16.59 billion in 2030. Here’s a breakdown of annual revenue by Wall Street. Keep in mind that long-term projections are more prone to greater uncertainty.
|2026||$ 8.97 billion||23%|
|2027||$ 10.65 billion||19%|
|2028||$ 12.56 billion||18%|
|2029||$ 14.53 billion||16%|
|2030||$ 16.59 billion||14%|
Profitability is also expected to skyrocket on an adjusted basis.
|year||Adjusted EPS||Year-on-year growth|
Pinterest Bull case
Without a doubt, Pinterest’s greatest opportunity to grow its business in the future is to monetize its users. In particular, the majority of MAUs are located outside of the United States, where Pinterest’s Average Revenue Per User (ARPU) remains relatively weak.
|Geographic segment||MAUs (Q1’21)||ARPU (Q1’21)|
|United States||98 million||$ 3.99|
|International||380 million||$ 0.26|
|Global||478 million||$ 1.04|
It’s encouraging that Pinterest has made significant strides in promoting international monetization – the ARPU doubled in the last year – but much remains to be done to take full advantage of the hundreds of millions of MAUs based overseas .
Of course, Pinterest will also expand its MAU base. The combination of a growing MAU base and a higher ARPU can be very powerful if the company is performing well and translating into sustained revenue growth.
Ecommerce and shopping strategies are still in the early innings, with Pinterest gaining traction with users and advertisers alike. About 20% of the first quarter revenue came from advertisers trying to drive sales directly.
Due to the visual nature of the platform, Pinterest is uniquely suited to delivering compelling shopping experiences.
Pinterest bear case
The competition in the social media sector often comes from Facebook, which has a long history of replicating every innovative new feature developed by a smaller rival and then delivering that feature to its huge user base of 3.45 billion MAUs. The tech juggernaut does not always succeed in these dual efforts, but not for lack of experimentation.
Fortunately for Pinterest, Facebook has already tried – and failed – to copy Pinterest’s value proposition. Facebook’s New Product Experimentation (NPE) division released a Pinterest clone called Hobbi in early 2020, only to close the app a few months later after it didn’t gain momentum.
Still, Facebook has deep pockets and the resources to compete over the long term, so the social media conglomerate could continue to attack Pinterest’s DIY hobbyist niche.
Beyond the competition, Pinterest could also struggle to improve monetization in international markets, which would lead to disappointing financial results. Success is far from guaranteed, and growing international ad sales require localization while adapting to different market conditions.