Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money

79% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

Tricks of the trade

How to Day Trade Stocks & Indices

Learn how to:

  • Place your first trade
  • Identify 9 chart patterns
  • Pro strategies step-by-step

You'll also receive our newsletter and other Opto emails in accordance with our privacy policy.

Updates

What’s the full picture for Pinterest’s share price?

Pinterest [PINS] reported a net loss of $124.7mn ($0.23 per share) for the three months to September 2019 – a huge increase from a $18.9mn reported in the previous period in 2018. Meanwhile, the company reported revenues of $279.7mn Q3, up from $190.2mn a year ago.

>>> In London? Join us for a special event, Normal doesn’t make money <<<

However, this considerable revenue growth of around 47% was notably slower than the 62% growth reported in Q2, and the 54% in Q1. This revenue deceleration incited a 17% drop in Pinterest’s share price on Friday.

 

 

Rohit Kulkani, analyst at MKM Partners said that the company’s revenue not meeting expectations was “driven by slower than expected growth in monetization and largely in-line growth in number of users”.

In a letter to its shareholders, Pinterest noted that its Q3 growth “is compared to our most challenging year-ago comparison, particularly in the US.”

However, shareholders were less than impressed. The share price dropped to $20.86 on Friday (1 November) – close to the $19 price it floated at back in April, and a huge drop on a mid-August high of $36.83.

“There was a slowdown in US revenue growth and revenue per user growth. This is concerning because advertising is typically most valuable in the US,” said Morningstar analyst Ali Mogharabi, according to the Financial Times.

“There was a slowdown in US revenue growth and revenue per user growth. This is concerning because advertising is typically most valuable in the US” - Morningstar analyst Ali Mogharabi

 

Meanwhile, some found it difficult to distinguish Pinterest’s story from those of other struggling unicorns.

Douglas McIntyre writing in 24/7 Wall St accused co-founder and chief executive Ben Silbermann of violating the cardinal rule of internet company IPOs. “He was unable to grow his company fast enough. That, combined with incredible losses, throws Pinterest into the club of failed unicorns, the promise of which disappeared just as the company sold shares to the public.”

 

A prettier picture abroad

Despite the disappointing figures, Pinterest adjusted its annual revenue forecast to $1.1bn to $1.115bn, compared with previous expectations of $1.095 to $1.115bn.

As monthly active users, or pinners, in the US grew just 8% to 87 million, the number globally jumped 28% to 322 million to beat forecasts. Average revenue per user of $90 was just shy of the $91 prediction from FactSet.

87million

VNumber of monthly active users, or pinners, in the US

  

In addition, its expectations of an annual net loss of between $10mn and $30mn, narrower than previous ranges of $25mn to $50mn.

Pinterest highlighted its international expansion drive with overseas revenues tripling to $28mn. International revenue – present in 28 territories - now accounts for over 10% of its revenue total, up from below 5% in the same period last year.

The number of international users rose 38% to 235 million, however it collected only $0.13 for every user over the period.

Pinterest said there remained a “significant opportunity” to grow the company in English-speaking countries and in Western Europe. It is also eyeing revenue growth through video ads and eCommerce features to allow users to buy products through its platform. Indeed, its video ad formats grew three-fold year-over-year.

Silbermann said that Pinterest was “building a lot of the back-end features to improve upload speed, client performance, and analytics”.

 

Market cap$11.147bn
EPS (TTM)-4.71
Operating Margin (TTM)-128.11%
Quarterly Revenue Growth (YoY)47.10%

Pinterest share price vitals, Yahoo Finance, 04 November 2019

 

The bigger picture

The mood among analysts is also positive. The mean consensus according to MarketScreener is outperform, while the stock has an average target price of $30.16.

“At a price-to-sales ratio of about 16, the stock is highly valued,” said Motley Fool’s Jeremy Bowman. “But with a unique niche in social media and search, and a promising future, Pinterest has the potential to surprise even the bulls five years from now.”

The group could have 540 million monthly active users by 2024 and will likely also be profitable by that date, he noted.

540million

Estimated monthly active users by 2024

  

Aaron Goldman, CMO at marketing technology company 4C Insights, pointed out how critical Pinterest has been to paid media plans with its “unique ability to incorporate brands into the app in a way that allows advertising to add value to the user experience.”

He said that marketers have been deriving results from Pinterest, from brand awareness to product purchase and to repeat sales. “In the third quarter advertisers running ads on Pinterest through 4C increased their spend by more than 80% year-over-year.”

Looking ahead, Goldman pointed the company’s eCommerce advertising format, expansion plans, and potential for new subscribers as providing “a ton of upside”.

Continue reading for FREE

Join the 30,000+ subscribers getting market-moving news every week.

Written by

Free ebook

Tricks of the trade: 7 interviews with the world’s top traders

Get it now

Disclaimer

Past performance is not a reliable indicator of future results.

CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.

CMC Markets does not endorse or offer opinion on the trading strategies used by the author. Their trading strategies do not guarantee any return and CMC Markets shall not be held responsible for any loss that you may incur, either directly or indirectly, arising from any investment based on any information contained herein.

*Tax treatment depends on individual circumstances and can change or may differ in a jurisdiction other than the UK.

Related articles