Pinterest shares (PINS) tanked in after-hours trading after the social media company released its third-quarter earnings report, which was accompanied by a soft outlook. Revenue increased by 17.7% to $898.37 million, which beat the estimated $896.89 million. This growth was driven by strong performance across all regions. As a result, adjusted EPS of $0.40 beat estimates of $0.34.
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In addition, global monthly active users climbed 11% to reach 537 million, while global revenue per user rose by 5% to $1.70. When breaking down the revenue per user numbers further, the U.S. and Canada region witnessed a 13% increase to $7.31, Europe saw a 10% rise to $1, and the rest of the world grew 18% to $0.14.
Outlook for 2024
Looking forward, management has provided the following guidance for Q4 2024:
- Revenue of $1.125 billion to $1.145 billion versus analysts’ estimate of $1.145 billion
- Operating expenses of $495 million to $510 million
It’s worth noting that this outlook states that revenue growth (15%-17%) will outpace the increase in operating expenses (11%-14%). This is a desirable sign, as it suggests that the business is able to achieve operating leverage. This essentially means that scaling the business higher will improve profitability margins.
Nevertheless, revenue at the midpoint was below the consensus estimate, and this weak outlook is what caused shares to plunge.
Is PINS Stock a Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on PINS stock based on 11 Buys, two Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. After a 10% rally in its share price over the past year, the average PINS price target of $42.79 per share implies 24.5% upside potential. However, it’s worth noting that estimates will likely change following today’s earnings report.
