Pinterest (PINS) Stock: A Stock to Avoid for Now?
Pinterest (NYSE: PINS 0.00%↑) is a popular visual search and discovery platform that helps users find inspiration for everything from recipes to home décor. But if you’re thinking about adding Pinterest stock to your portfolio, you might want to reconsider—at least for now. While Pinterest offers an intriguing concept, its recent stock performance and challenges suggest that it could be a riskier play in the current market environment.
A Year of Struggles for Pinterest Stock
Over the past year, Pinterest’s stock has faced a significant downturn, losing 16.49% of its value. This decline has raised concerns for investors who were hoping for strong returns. While the stock has recently seen a brief rebound with a one-month return of 6.06%, it’s important to understand that this small gain doesn’t erase the larger, ongoing struggles the company is facing. As of December 17, 2024, Pinterest shares were priced at $31.00, giving the company a market capitalization of $20.95 billion.
But why the slump?
A Rocky Q3 2024
Pinterest’s performance in Q3 2024 has left investors scratching their heads. While the company posted solid second-quarter results—boasting 522 million Monthly Active Users (MAUs), a 12% increase year-over-year—its stock still dropped. Why? Despite revenue slightly exceeding estimates at $854 million and EBITDA surpassing expectations, the company’s guidance for the third quarter fell short of Wall Street expectations. Pinterest projected revenue between $885 million and $900 million, which was seen as underwhelming given the market’s appetite for faster growth.
In short, Pinterest's forecast for the near term didn’t inspire confidence, causing a dip in the stock price. For investors hoping for quick gains, this is a red flag.
Strong User Growth, But at What Cost?
While Pinterest is certainly growing its user base, this doesn't necessarily mean the stock is a good investment right now. In fact, despite its user growth and 18% year-over-year revenue increase in Q3 2024, Pinterest's stock has struggled. The platform’s growth story seems a little too slow for a market that’s increasingly focused on faster, more explosive growth opportunities—especially in sectors like artificial intelligence.
Pinterest may be doing well in terms of user engagement, but its competition in the digital advertising space, with giants like Google and Facebook, is fierce. The potential to capture more advertising dollars is there, but Pinterest is fighting an uphill battle. Add to that the fact that Pinterest is facing pressure to innovate quickly and continue growing at a strong pace, and it’s clear that the company has a lot to prove.
Why Pinterest Might Not Be the Right Investment for Now
Investors looking for growth in the near term might want to steer clear of Pinterest stock. The company’s growth, while steady, isn't happening fast enough to keep up with the rapid expansion of other tech stocks, especially in AI. Despite strong user growth and increasing revenue, Pinterest’s stock has been volatile, and its near-term outlook remains uncertain.
For newer investors, it’s important to remember that the stock market rewards companies that can scale quickly and consistently. Pinterest, despite its strengths, may not be one of those companies—at least not at the moment. If you're looking for a stock with more immediate growth potential, there are likely better opportunities elsewhere.
A Stock to Watch, But Not Buy—For Now
Pinterest’s stock is far from a lost cause, but its recent performance and outlook suggest that it might be one to stay away from in the near future. The company’s growth is steady, but not explosive enough to compete with other tech stocks that are outperforming in the current market.
For investors looking to build a portfolio with higher returns in the short term, Pinterest may not be the best fit right now. However, it’s worth keeping an eye on the company as it continues to navigate its challenges and strive for growth. Just remember that there are currently other stocks out there with more promising opportunities.
Our current position: in at $24 per share.
*Disclaimer: Not Financial Advice. Investors should conduct thorough research and seek professional advice before making any investment decisions.