What Happened?

Shares of social commerce platform Pinterest (NYSE: PINS) jumped 26% in the pre-market session after the company reported fourth-quarter results, which beat analysts' revenue and EBITDA expectations. Its quarterly guidance for both metrics outperformed Wall Street's estimates. The growth was driven by a record-high 553 million global monthly active users (MAUs), up 11%, and a 6% increase in global average revenue per user (ARPU)​. Overall, we think this was a good quarter with some key metrics above expectations. 

Following the impressive performance, Bernstein upgraded the stock from Hold to Buy, adding, "It's possible that this quarter was a one-off, though we see enough evidence in execution to believe the pace of progress is sustainable.".

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What The Market Is Telling Us

Pinterest’s shares are not very volatile and have only had 8 moves greater than 5% over the last year. Moves this big are rare for Pinterest and indicate this news significantly impacted the market’s perception of the business. 

The biggest move we wrote about over the last year was 9 months ago when the stock gained 24.1% on the news that the company reported first-quarter results with revenue exceeding analysts' expectations on higher-than-expected MAUs (monthly active users). 

Management called out progress with product innovation, including Direct Links, API for Conversions and automated bidding. Pinterest also previewed further product innovation around bidding and dynamic creative optimization solutions to help advertisers on the platform. Contributing to the strong topline performance, next quarter's revenue guidance came in higher than Wall Street's estimates. The big bright spot was actually next quarter's implied operating profit guidance--while Wall Street was expecting a loss, the company guided to a nice profit instead. 

Overall, we think this was a really good quarter that should please shareholders.

Pinterest is up 28.9% since the beginning of the year, but at $39.43 per share, it is still trading 12.3% below its 52-week high of $44.98 from June 2024. Investors who bought $1,000 worth of Pinterest’s shares 5 years ago would now be looking at an investment worth $1,565.

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