'A Near Insurmountable Climb': Pinterest Analysts React To Q4 Earnings Beat

Pinterest Inc PINS shares traded higher by 8.7% on Friday after the company reported a fourth-quarter earnings beat on Thursday afternoon.

Pinterest reported fourth-quarter adjusted EPS of 49 cents on revenue of $847 million. Both numbers beat analyst expectations of 45 cents and $827 million, respectively. Revenue was up 20% from a year ago.

Pinterest global monthly active users dropped 6% to 431 million. U.S. MAUs fell 12% to 86 million. Global average revenue per user was up 23% in the quarter to $1.93.

Looking ahead, Pinterest guided for first-quarter revenue growth "in the high teens," in line with analyst estimates of 18% growth.

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Voices From The Street: Credit Suisse analyst Stephen Ju said U.S. user growth appears to be stabilizing, while the company's revenue beat was driven by both small and medium-sized businesses and retail advertisers.

"Secondarily, it appears management is developing a differentiated creator use-case as it is focused on rolling out permanent content across its key verticals, including beauty and home, rather than short-form transient videos," Ju wrote.

Bank of America analyst Justin Post said Pinterest is investing heavily in user growth.

"In 2022 Pinterest will invest in native content and creators, site personalization to improve the core Pinner experience, and shopping to drive engagement, and [the] company noted success with prior investment cycles in the past," Post wrote.

Rosenblatt Securities analyst Mark Zgutowicz said Pinterest is dealing with an increasingly saturated market given nearly 90% of U.S. women between the ages of 18 and 44 are already monthly Pinterest users.

"Despite Pinterest's noble ambitions to follow the burgeoning path of short video and social commerce, we see a near insurmountable climb to compete with the giants already there (e.g. Meta/Instagram/Reels, Tik Tok, Google/ YouTube Shorts, Snap/Spotlight) providing dominant scale of content, economics and reach to consumers, creators, and advertisers, respectively," Zgutowicz wrote.

Ratings And Price Targets:

• Credit Suisse has a Neutral rating and $39 target.
• Bank of America has a Neutral rating and $46 target.
• Rosenblatt Securities has a Neutral rating and $35 target.

The stock trades around $26.60 at publication time.