PINTEREST (PINS) Value Play

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PINTEREST INC. (PINS), is an American social media web and mobile application company. It operates a software system designed to enable saving and discovery of information using images, GIFs and videos.

Pinterest IPO

Pinterest is trading slightly above its IPO price of $19.00 per share. The stock is down almost 50% from its 52 week high price of $36.83. With the stock trading close to it’s 52 week low price of $18.71 now is the perfect time to buy. 

Pinterest IPO debut was successful as the stock gained 28.4% on its first trading day. Shares hit a 52 week high price of $36.83 per share in August before coming back down.

With the stock down close to its IPO price, and increasing fundamentals; now is a time to start considering Pinterest as a buy. A sound strategy with investing is dollar cost averaging, because it provides a less risky approach to scaling into a stock.

Institutional Ownership

Pinterest has an institutional ownership (75.54%), owned by the likes of Blackrock Inc, Vanguard Group Inc, Wells Fargo, and Morgan Stanley. Because of the stocks high institutional ownership, it is definitely a company worth keeping on your radar in 2020.

Will Pinterest Become A Profitable Company?

Pinterest’s financial’s are not as much of a disappointment as people may think. Pinterest expects to lose between $10 million and $30 million on an adjusted EBITDA basis in 2019. The company projected sales between $1.1 billion and $1.2 billion. 

In the third quarter (2019), its average revenue per user (ARPU) in the U.S. was $2.93, up 26% year over year. Internationally, its ARPU was 13 cents, 127% higher than a year ago. However, it’s active monthly users grew to 235 million, up 38% year over year. Pinterest’s active monthly users are growing rapidly. Their advertising business will likely grow simultaneously with their monthly active user base. Moreover, Pinterest has a consensus price target of $27.84. Analysts are optimistic on the company’s growth ahead in 2020. This can be credited to the company surpassing Snapchat in DAU’S (Daily Active Users).

Whats Next

Pinterest seems fairly undervalued due to their attractive business model and projected growth over the next 2-5 years. If Pinterest continues to drop lower it might provide a great buying opportunity. Pinterest is another growth story similar to Facebook and Twitter. Because of the company’s active and engaged user base that is growing rapidly. Pinterest’s stock might provide a great buy and hold strategy for the years to come.

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