Despite exceeding Q3 top and bottom line expectations, weaker revenue guidance led to Pinterest PINS stock falling over -15% last Friday.
While the visual recommendations provider didn’t receive a post-earnings spike like other social media stocks such as Meta Platforms META and Snap SNAP, investors may wonder if the selloff in PINS is overdone.
Pinterest Q3 Results
Reporting Q3 results after market hours last Thursday, Pinterest’s quarterly EPS of $0.40 was above the Zacks Consensus of $0.34 and soared 43% from $0.28 a share in the prior-year quarter. This came on sales of $898.37 million which edged Q3 estimates of $897.07 million and increased 17% from $763.2 million a year ago.
Notably, Pinterest has exceeded earnings expectations in each of its last four quarterly reports posting an average EPS surprise of 17%. Pinterest has beaten top line estimates in three of the last four quarters with an average sales surprise of 1.45%.
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Pinterest Outlook & Guidance
Although Pinterest’s financial results were favorable, Q4 revenue guidance of $1.12-$1.45 billion came in below many analysts’ estimates with the current Zacks Consensus calling for sales of $1.15 billion or 17% growth (Current Qtr below).
Based on Zacks estimates, Pinterest’s total sales are projected to increase 19% in fiscal 2024 and are forecasted to expand another 17% in FY25 to $4.25 billion. Even better, annual earnings are expected to soar 32% this year and are slated to climb another 20% in FY25 to $1.73 per share.
Increased spending to build out a suite of artificial intelligence automation tools played a part in Pinterest’s weaker-than-expected guidance along with lower demand for its Food and Beverage segment which includes recipes, meal planning ideas, and other culinary trends.
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Tracking PINS Stock Performance
Pinterest stock is down -17% this year with PINS seeing a modest rebound in this morning’s trading session. Like Snap which is down more than -20% year to date, Pinterest has vastly underperformed the broader indexes and Meta’s +64%.
Since going public in April of 2019, Pinterest stock is still up +24% to top Snap’s +4% during this period. Still, this has noticeably lagged the benchmark S&P 500 and the Nasdaq which are up over +100% while Meta shares have skyrocketed more than +200%.
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Pinterest Balance Sheet & Valuation
Trading around $30, Pinterest stock is more reasonably valued after its recent selloff at 20.3X forward earnings. This is well below Snap’s 50X forward earnings multiple and a slight discount to the benchmark’s 24.4X and Meta’s 26.1X.
Amid increased spending on AI, Pinterest’s balance sheet is reassuring with $2.44 billion in cash & equivalents at the end of Q3 2024. Furthermore, Pinterest has $3.49 billion in total assets which is nicely above its total liabilities of $597 million.
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Bottom Line
Pinterest stock currently lands a Zacks Rank #3 (Hold). Pinterest’s revenue guidance for Q4 may have been underwhelming, but PINS could reward investors from current levels especially those that commit to long-term positions. To that point, Pinterest’s push into AI could pay off by increasing the company’s operating efficiency with some analyst pointing to higher return on ad spend (ROAS) specifically.
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Pinterest, Inc. (PINS) : Free Stock Analysis Report
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