Pinterest's stock surges on jump in revenue

Shares of Pinterest (NYSE: PINS) soared 17% in premarket trading on Tuesday, spurred by robust quarterly performance signalling the image-sharing platform’s robust resurgence in the advertising market.

The company reported a solid surge in monthly active users, reaching an unprecedented high of 482 million. A substantial portion of this growth was attributed to Generation Z, making Pinterest an attractive hub for mobile advertisers.

This stellar performance elicited positive responses from Wall Street, with 19 analysts raising their price targets on Pinterest shares. According to Refinitiv data, the median price target surged to $35, indicating a promising trajectory for the platform.

Currently trading at $29.10, Pinterest’s shares displayed a promising outlook, potentially adding nearly $3 billion to its market value. The platform’s revenue for the third quarter of 2023 rose by 11% from the previous year, reaching $684.6 million. Additionally, the number of global monthly active users increased by 8% year-over-year, surpassing analysts’ expectations and reaching 482 million. The average revenue per user stood at $1.61, outperforming projections by analysts, who anticipated $1.59.

Pinterest’s optimistic forecast continues into the fourth quarter, with expected revenue growth between 11% to 13%. This midpoint outlook surpasses analyst estimates, which forecasted growth at 11.3%.

Pinterest’s upbeat stance on the advertising market mirrors recent sentiments from tech giants Meta, Google, and Snap, who also noted a recovery from the pandemic-induced slowdown. Like its counterparts, Pinterest experienced robust growth in the retail sector, showcasing its resilience in challenging economic climates.

Notably, Pinterest revealed that more than half of its users now view the platform as a shopping destination. To enhance user engagement, the company has strategically enhanced its “shoppability,” aiming to translate user intent into revenue in the coming years.

Analyst Schmulik remarked, “If the company can convert that intent to revenues over the next few years, then we can see a pathway to further revenue acceleration beyond our base case and closing the gap to more intentional, shopping-heavy peers.”