Wait a little bit longer for buying PINS
Pinterest (NYSE:PINS) $Pinterest, Inc.(PINS)$is a social media company that allows users to share and discover ideas through pictures and videos, currently with global monthly active users of over 430 million. Pinterest was one of the winning stocks from the pandemic. The company saw its share price rise from $12.2 in March 2020 to over $85 in February 2021, up 600% within just a year. This can be attributed to the worldwide lockdown which significantly boosted the company’s MAU (monthly active users) and engagement rate, as a lot of people turned to Pinterest to find ideas for cooking recipes, knitting patterns and etc., as they are stuck at home. Yet, as the pandemic wanes and the lockdown eases, investors are fleeing the stock with concern over MAU growth and future prospect. As a result, the stock price has been plummeting since early last year and is now down over 75% from its all-time high.
Pinterest is a unique social media company. It is fundamentally differentiated from its peers like Meta (FB), Snap (SNAP), Twitter (TWTR), and TikTok. These companies mostly emphasize the interaction between users while Pinterest emphasizes idea discovery with its Pins. The expansion to social commerce makes a lot of sense as it is able to offer a personalized shopping experience while users are exploring through different Pins. This is a win-win situation for both the user and the advertiser as the user is able to buy what it wants while the advertiser can offer a highly targeted ad.
The current uncertainty regarding the macro environment will likely post strong headwinds on Pinterest in the short term. Signs of cracks are already showing with a significant slowdown in the economy across the board as high inflation rate persists and supply chain blockage continues. China is adding fuel to the fire with its zero covid policy, resulting in worse than expected GDP growth for the second quarter. The latest CPI (consumer price index) print also came in higher than expected at 9.1%, above the 8.8% consensus. While core CPI (excluding food and energy) increased by 5.9%, compared to the 5.7% estimate. This resulted in plummeting consumer confidence, which is now at levels not seen since the great financial crisis, according to Michigan Consumer Sentiment Data.
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