Is Pinterest a Buy After its Spectacular Q3 Earnings Report?

Pinterest (NYSE: $PINS) reported strong Q3 financial results that exceeded Wall Street’s expectations. The company’s monthly active user numbers reached an all-time high. The stock went up by 20% after the earnings report. The social media firm also reported optimistic guidance for the next quarter.

Pinterest Earnings and Revenue Top Estimates; Q4 Guidance Optimistic

Shares of Pinterest surged nearly 20% on Tuesday, a day after the company reported Q3 earnings that beat consensus estimates on top and bottom lines. The stock closed at $29.88, the highest since July.

The impressive surge comes after Pinterest posted adjusted earnings per share (EPS) of 28 cents for Q3, topping the consensus projection of 20 cents. Net income stood at $6.73 million for the quarter, compared to a $65.2 million loss reported in the year-ago period.

Revenue came in at $763.2 million, up 11% year-over-year and above the analysts’ expectations of $743.5 million. 

Looking ahead, Pinterest expects Q4 revenue growth to be 11% to 13%. The midpoint of that guidance is above Wall Street’s projection of 11.3%. 

The Q3 results mark the latest in a series of solid corporate earnings published recently, with Microsoft (NASDAQ: $MSFT), Meta (NASDAQ: $META), and Amazon (NASDAQ: $AMZN) taking the spotlight. However, the broader stock market still came under pressure amid challenging macroeconomic conditions, including rising Treasury yields and geopolitical disputes.

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Pinterest’s Global Monthly Active Users Hit Record High

One of the highlights of the Q3 report was a notable increase in global monthly active users of 8% from a year earlier to 482 million, marking a record high and exceeding the 473 million expected by analysts. Average revenue per user reached $1.61, also above the estimated $1.59. 

Pinterest attributed its success in the quarter to “its ability to attract and retain advertisers and effectively measure advertising campaigns.”

This better-than-expected metric may attract more advertisers looking to diversify their ad spend. The significant surge in global monthly active users indicates that Pinterest represents another venue for advertisers to increase their reach beyond the biggest platforms like Facebook and Google. 

With solid fundamentals and Pinterest’s upbeat Q4 guidance, the company is well-positioned to continue its current momentum in the stock market. Despite the latest surge, Pinterest’s shares are still trading at a significant discount when compared to its all-time high of $89.15 reached during the pandemic. However, its ability to maintain the uptrend will be largely affected by wider market conditions. 

Do you think Pinterest stock could come close to its all-time high in the coming years? Let us know in the comments below.