Pinterest Is Taking Share From Meta Platforms, Twitter In The Social Media Ad Space: Why Piper Sandler Wants Clients To Buy Right Now

Pinterest Inc PINS shares are rising Tuesday and if Piper Sandler is right about the idea discovery platform, the stock should continue to see more buyers than sellers into 2023.

What To Know: Piper Sandler expects Pinterest shares to outperform as the social media stock crosses into 2023, guided by multiple tailwinds. 

"The lows are likely already in," Piper Sandler analysts wrote in a new note to clients. 

Following an ad-buyer survey and a series of checks pointing to better user trends, Piper Sandler upgraded Pinterest to Overweight.

Advertising Survey: Piper Sandler's 2023 ad buyer survey showed that Pinterest is taking share in the social space. 

Meta Platforms Inc's META Facebook maintained its position as the social advertising leader, but the survey showed that it hasn't gained share. Furthermore, Meta's Instagram lost advertising share, falling from 23% to 21%. Twitter is the only other social platform that shows declining market share in the ad space.  

On the other hand, Pinterest, Snap Inc SNAP and TikTok all gained share. Pinterest's ad share increased from 5% to 8% year-over-year.

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"Twitter is the largest share donor of the group, and it’s possible that PINS’ brand safe platform provides a desirable alternative for spend leaving Twitter," Piper Sandler said.

User Trends: User growth had been trending sideways from the second quarter of 2021 to the second quarter of 2022, but trends have re-inflected positive in the most recent quarter, Piper Sandler said, adding Ads Manager data suggests that recent user trends continue. 

Pinterest is seeing significant growth internationally, as well as strong growth on its mobile app in the U.S. 

"PINS provides exposure to a higher-income demographic with commercial intent. Plus, we now see an entry into younger cohorts which comprises a smaller part of the base today," Piper Sandler said.

Piper Sandler also sees a handful of other tailwinds ahead, including improving margins in 2023, a share buyback and revisions to estimates. 

"We take FY23 revenue & EBITDA 2% higher to reflect strong survey results. On our new estimates, our DCF-based target moves to $30 from $25," Piper Sandler said.

PINS Price Action: Pinterest has a 52-week high of $38.63 and a 52-week low of $16.14.

The stock was up 12.4% at $26.54 Tuesday afternoon, according to Benzinga Pro.

Photo: Hassas Arts from Pixabay.