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Pinterest: Significant Upside At Just 8x P/S

Nov. 02, 2021 6:46 AM ETPinterest, Inc. (PINS)62 Comments
Arne Verheyde profile picture
Arne Verheyde


  • Pinterest stock has collapsed in the last quarter due to (1) MAU headwinds and (2) the aftermath of the PayPal acquisition rumor.
  • Despite this, analysts still expect Pinterest to grow over 30% in 2022. Pinterest has continued to expand ARPU.
  • This means Pinterest currently trades for ~8x forward P/S. If Pinterest was valued like Snap, it would trade for ~$100. Buy the dip.
Pinterest Application login page

SeanShot/iStock Unreleased via Getty Images

Investment Thesis

Pinterest (NYSE:PINS) stock has been quite volatile recently. The stock first saw a drop-off earlier this year due to what many investors would view as concerning MAU (monthly average users) trends. More recently, the stock first saw a jump as the PayPal (

This article was written by

Arne Verheyde profile picture
With an engineering background, looking for companies with expertise to be well-positioned for growth and leadership.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of PINS either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (62)

crrj profile picture
Tax loss selling just beginning? $28??
Long term winners looking to sell before DEMS raise taxes next year?
The one positive about the ER is it stopped the bleeding. We aren't going to rocket back to $80 anytime soon absent US user growth returning, but I doubt we drop much further than where we already are.
Any thoughts if any other white knights would be interested at this valuation?
Zorgo profile picture
@alphacharlestango they won't sell at this valuation, though.
@alphacharlestango - Here are two:
Microsoft (they were rumored to have been interested earlier this year). They could move PINS content onto their Cloud (Azure) at cost and cutting out Amazon AWS expenses.

Amazon - Same rational as above but in addition, use PINS to drive more business to Amazon. Browse on PINS and then click through to Amazon store.
All Things Energy profile picture
@alphacharlestango i sincerely hope not. I sold out when the PayPal deal was rumored. Now I have bought back. I have absolute conviction in this stock as a 10x candidate. They are just beginning to understand the monetization potential of its users. If FB can get $10 ARPU - even 10% of that will enable PINS to double in value
In every field there are always many competitor and upcoming one too,. we as investor should just look at whether they can scale well and they can growth well. And i can said this PINS is one worth to buy some,
All Things Energy profile picture
Results are underwhelming IMO, but the CEO communicated vision is pretty convincing. I understand totally what they are trying to do and how they plan to monetize. I think they can do it - so at this price, with current profitability - you are getting all that '2 way marketplace' sales optionality for free.
Calling bottom
crrj profile picture
How far down will PINS drop on tax loss selling the next 50 days? $30?

Compared to FB, APPLE, GOOG, AMZN, what will their P/S be next yr?
Somebody aching to monetize their user base further is gonna buy this thing. Walmart or Microsoft maybe? Sounds crazy, but they did go after TikTok…

All the PayPal fallout did was place a giant “for sale” sign on the company now every banker on the planet will be pitching it. Messy, but probably a decent buy down here give the more reasonable valuation.
@FlyOnTheWallStreet part of the reason why the stock has sold off so much I'm sure. This is the second time PINS has been rumored to be looking to sell.
@atdh1 You mean others have offered. Microsoft and Paypal.
@FlyOnTheWallStreet pintrest and amazon would be interesting. I suspect shop makes a play
IG (via FB/Meta), Snap, TikTok, all investing in Metaverse plays. PINS remains old school, despite trying to monetize more aggressively, again through old-school methods (adding videos, whoa!!).
Hard to see a moat here, when any of the large social media platforms could simply add a more aggressive photo component and negate need for PINS to exist.
PINS is still very popular but, its also fading and attracting fewer people. Something to strongly consider. I see share price declining and then a buyout. I feel PayPal let it go for now because they know they can get it cheaper in the near future.
@MiamiInvest305 LOL, all wrong. Paypal left because Pinterest considered $70/share too low.
@JohnnyXY No. Paypal walked away, not the other way around.
All Things Energy profile picture
@MiamiInvest305 400M users is not a moat?
If MAUs drop again in the upcoming ER, then it could drop to 40 or even 38 or 36, which could be a good price to buy if you're a long term investor because the stock may not recover for a while. PINS could grow revenues 35% the next 5 years and EPS of $3-$5/ share in 5 yrs.
@drbob512 if they miss, I hope it does drop to $36 so my $38 Friday puts will be worth something. I'm still long the stock, so if they actually beat and it jumps 20%, I'll be ok with that too.
@atdh1 I hope it drops to mid 20s so my super cheap options 100x themselves. Unlikely but its just 10k in options.
@bobthebuilder1 it won't drop into the 20s unless they reveal something horrendous like misstated earnings or MAUs. it's hard to tell where we will head since we're already down so much coming into this report.
Diesel profile picture
PINS is extremely cheap but it will probably get cheaper before it starts recovering.
Muffinmann profile picture
I'm picking up a few shares since they're on sale. I just keep averaging into my position. i'm long
Isn't 82% of users mobile? How much of that are apple iphone users? Snap got massacred. I think a big drop will come after earnings.
@bobthebuilder1 I'm concerned about the apple IOS impact as well. But PINS is supposed to be less reliant than SNAP or FB on third party targeting affected by the apple IOS change. And PINS is not nearly as richly valued as SNAP. So it seems quite possible that this is more than priced in given the massive drop in PINS already. But it won't be clear until they report earnings.
@bobthebuilder1 - The Apple IOS issue should be a net positive to PINS. An advertiser has better line of sight of its target customers inside of PINS.
Pitnick profile picture
@bobthebuilder1 Globally, 32% of mobile Pinterest users use iOS per AppAnnie
Longer term, PINS looks fantastic. It's very inexpensive for its historical growth and projected growth. Increased monetization from a low base with an increasing ecommerce component will continue. US MAU's will stabilize and likely grow very modestly from here. International MAU's should continue to grow well for 5-10 years. But the market seems only interested in the short term for now - the impact of the Apple IOS change and US MAU numbers this year. So it's uncertain what the market will do when PINS reports earnings.
If PINS shows more US user decline on Thursday, this thing is going to collapse. I'm long since the mid $10s, but my confidence has really declined over the last few quarters. I even bought some weekly puts in anticipation of the share price collapsing after ER.
@atdh1 us MAU will definitely be down. The international will grow and if they can increase monetization I can see the earning $1.50/2.00 next year. At 30%+ growth the PE should be 40+ so the stock should increase
@Jlexus1953 Most international markets arent worth as much as US.
Pins is an interesting company in that it has 2.1 billion in cash, no debt, is profitable for 2 consecutive quarters and was essentially doubling revenue during the pandemic as more people were home with nothing to do. The stock skyrocketed all the way into the high 80’s and then essentially crashed when second quarter MAU’s decreased as more people began to venture out as the pandemic subsided somewhat which was reasonable. Interestingly 2nd quarter revenue met or beat expectations and Pins continues to work at better monetizing its existing 450+ million users with particular emphasis on international users where the level of advertising compensation pales in comparison to the US. They just expanded to Mexico and Latin America and have no presence in Asia Pacific so further MAU growth is reasonable to expect. Pins is a relatively new company whose stock perhaps got ahead of itself. Microsoft was purported to be interested in an acquisition prior to PayPal and there is a joint relationship with Shopify. Revenue expectations for the rest of the year are for 40% growth and 2022 expectations are 30+% so earnings should continue to expand at a reasonable level each quarter. No one can predict the future but this company looks to me to have the potential for significant stock expansion with a customer base of 450+ million and growing albeit slower than the market expects. I have some and might add to the position depending on Thursday earning results
Agree, IMO it really needs an infusion on the board by a solid hedge fund. Better management is the call, I still say a buyout is imminent.
Nah, i'll take a pass. Melting userbase, CEO dumping all his shares - also we never hear from him, he never speaks or does anything. Most passive management of all public companies. Pinterest is the next Tumblr, buy at your own risk. I see this at below 20$ after earnings.
Bnuts Alpha profile picture
@dessille melting user base? Are you joking? 458M (that's million) MAU's and growing internationally while they lost a small percentage of US desktop users in Q2. Please tell us your list of social commerce companies with a more attractive user base than PINS! Long PINS
@Bnuts Alpha Comon man… -7% as of July 2021 ( according to ceo during earnings call) which is huge, its not a small percentage, so be accurate. They are bleeding US users, which is why this is never going back to 90$.
You can throw around these words like « social commerce » or « metaverse », bottom line is that USA users are leaving Pinterest, for better social media ( Snap, IG etc..) Even at current market cap this is crazy overvalued, it’s definitely going back to 20$ on Thursday afternoon
Bnuts Alpha profile picture
@dessille You just demonstrated a complete lack of understanding of PINS, SNAP and IG so thank you for that. Why would PINS lose users to SNAP or IG when those platforms serve completely different demographic markets and have completely different products/purposes? So an interior designer, restaurant owner,, or other creator on PINS suddenly wants to drop all that and just start sexting on SNAP instead? LOL
PINS gets a seeking alpha valuation of F from various dimensions. How do you justify this?
@AnishSam different people have different opinions.
Well. I added some yesterday. Too cheap and certainly worth much more than 70 Facebook is trying to buy it at.
@Hawkssss - There is zero chance Facebook buys them as there is zero chance it would pass anti-trust approval in this political environment
your logic sounds rational in this most irrational market. we will go after this with a small spot with the thought that PYPL may have created something along the lines of a 70 dollar put, whether the rumor is true or false. other suitors may value this rising ARPU
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