Pinterest: The frictionless social commerce play for 2024

Key Points

• Pinterest is a leading social commerce platform that has mastered the art of frictionless soft sales.
• Pinterest grew its global monthly average users (MAUs) by 8% year-over-year (YoY) to 482 million and grew average revenue per user (ARPU) by 3% YoY to $1.61 globally and 5% YoY to $6.46 in the U.S. and Canada.
• Pinterest is back in the black, earning a GAAP net income of $7 million and adjusted EBITDA of $185 million in Q3 2023.

Pop-up ads, auto-play videos, tracking cookies and getting inundated with in-your-face promotions helped give rise to alternative web browsers like Opera Inc. NASDAQ: OPRA with built-in ad-blocking and private VPN technology in the computer and technology sector. 

Social media sites can be just as intrusive, so Pinterest Inc. NASDAQ: PINS can be a breath of fresh air for netizens.

No drama, no pressure and no pitches. Consumers come to the site to get ideas and inspiration, often leading to purchases in a frictionless and non-intrusive manner. The appeal has grown over time, as reflected by the 482 million worldwide users drawn to the site monthly. This non-intrusive, frictionless, soft-sell formula makes it the top social commerce play for 2024.

A picture speaks a thousand words

The first thing you notice when you go to Pinterest are the images of food, inspiration, fashion, hobbies, projects, recipes and art. It intuitively draws you to pins, compelling you to click for more details as if you had "discovered" the idea. That's why the company calls itself a "visual discovery" platform. As you find ideas, inspirations and products you like, you can pin them to your billboard like a scrapbook and share ideas by creating your own "pins."

Drama and controversy-free

Pinterest is one of the few social media sites that has stayed out of the spotlight, avoiding scrutiny or controversy over the years regarding content and privacy issues, which you can't say for sites operated like Meta Platform Inc. NASDAQ: META, X, TikTok, Snap Inc. NYSE: SNAP, Alphabet Inc. NASDAQ: GOOGL and Apple Inc. NASDAQ: AAPL. Check out the sector heatmap on MarketBeat.

Mastering the art of the soft sell

Much credit has to be given to CEO Bill Ready, formerly of Google.com and PayPal Inc. NASDAQ: PYPL. Ready has stated the importance of keeping the platform drama-free and neutral and maintaining a positive, personalized, and inspirational character while exploring new ways to monetize opportunities.

This is the embodiment of the soft sell, and it's a win-win. Advertisers also cite its positivity and brand-safe environment as a key reason for using the platform. 

Back in the black

Pinterest reported 28 cents in its third quarter of 2023, beating analyst estimates by 7 cents. GAAP net income was $7 million, while adjusted EBITDA increased by 139% to $185 million. Revenues grew 11.5% YoY to $763.2 million, beating $743.93 consensus analyst estimates.

Most of the growth came from Europe, up 33% YoY in revenues to $114 million. However, that pales compared to the $618 million generated in the U.S. and Canada, up 8% YoY. Average revenue per user (ARPU) rose 3% to $1.61 globally. In the U.S. and Canada, ARPU rose 5% to $6.46. Again, Europe had the largest percentage ARPU growth of 26% YoY but was only 91 cents.

Gen-Z is the fastest-growing segment

Global monthly active users (MAUs) rose 8% YoY to $482 million. Gen-Z is the fastest and most engaged segment of users. Gen-Z users save two times more pins in the first year than the older demographics. The artificial intelligence (AI) powered personalization is proving effective. Its “Shop the Look” module helps users pivot into shopping mode and has been surveyed to have exact or highly relevant matches for 70% of its product recommendations. 

CEO insights 

Pinterest CEO Bill Ready articulates the dynamics of the frictionless soft sell perfectly, “Pinterest users engage in dynamic multi-session journeys that go from inspiration to action. In other words, people are saving and curing ideas and products they hope to make, do or buy today and in the future. That means they easily pick up where they left off every time they use Pinterest, with our recommendation getting increasingly relevant each time.” This results in shopping decisions for over half of Pinterest users. 

They continue to employ AI constantly to improve the relevance of their personalized content recommendations. Get AI-powered insights on MarketBeat. 

Analysts sold on Pinterest 

Several analysts have upgraded their ratings on Pinterest's stock. Bank of America Securities raised their rating to a "buy" from "neutral" with a $37 price target. New Street started coverage with a "buy" and a $48 price target. Jeffries raised its rating to a "buy" from "neutral" and a $41 price target. 

RBC Capital Markets upgraded shares to "outperform" with a $46 price target. Raymond James resumed coverage with an "outperform" rating and a $45 price target. 

Pinterest analyst ratings and price targets are at MarketBeat. You can find Pinterest peers and competitor stocks with the MarketBeat stock screener.

Daily bull flag 

The daily candlestick chart on PINS illustrates the daily bull flag breakout pattern formed in December 2023. Shares peaked at $38.24 and formed a market structure high (MSH) sell trigger at $37.02. 

PINS fell to $35.36 on a pullback as the daily relative strength index (RSI) slipped under the 70-band and stalled near the 50-band. The daily 50-period moving average and daily 200-period moving average are still in uptrends, rising at $33.23 and $28.03, respectively. Pullback support levels are at $34.33, $32.69, $30.32 and $27.92.