Pinterest Inc (NYSE:PINS) appears to have blown it, according to analyst reactions to its Q1 data. The company missed on the bottom line and came in around expectations on the top line earlier this month. We wanted to revisit the report now because the stock represents an interesting internet business example that failed to excite folks looking for somewhere non-covid-19-affected to channel investment dollars.
The company didn’t provide guidance, which has become a standard idea. But it still carries a sense of foreboding in each case. Overall, the gross margins appear to be the pressure point, with several analysts citing that factor as a specific reason to be particularly cautious on PINS.
The big picture issue here – as we parse through the data and the commentary from other analysts – appears to be a tiering issue. In other words, Pinterest is not quite as crucial to major advertisers as, say, FB, TWTR, or SNAP in determining social media ad budgeting. The company decelerated more meaningfully than peers to down 8% y/y in April.
In simple terms, PINS stuck out. And not in a good way.
It probably didn’t help that we had already seen signs of strength from FB and SNAP ahead of this report, which juiced up expectations. The let-down has led to the stock being one of the very few names in this internet space that remains negative since posting Q1 data.
Pinterest Inc (NYSE:PINS) trumpets itself as a company that provides visual discovery engine in the United States and internationally.
The company's engine allows people to find inspiration for their lives, including recipes, home and style ideas, travel destinations, and others. It shows them visual recommendations based on people personal taste and interests.
Our PINS Earnings Summary:
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Pinterest misses by $0.01, reports revs in-line
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Reports Q1 (Mar) loss of $(0.10) per share, excluding non-recurring items, $0.01 worse than the S&P Capital IQ Consensus of ($0.09);
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Revenues rose 34.7% year/year to $271.94 mln vs the $270.69 mln S&P Capital IQ Consensus.
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Global Monthly Active Users (MAUs) grew 26% year over year to 367 mln
Our PINS Research and Conference Call Notes:
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"This quarter, we saw a record number of people turn to Pinterest for ideas on how to make living at home more convenient, fun, and inspiring... We began 2020 on strong footing. The spread of COVID-19 has certainly had an impact on our business and the businesses of our advertisers, but we remain optimistic about the future."
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"While we've been adapting to the current environment, we will continue to invest in our strategic priorities of content, ads diversification, use case expansion and shopping."
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Pinterest downgraded to Neutral from Buy at DA Davidson; tgt lowered to $19
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$PINS downgraded to hold from buy following 1Q20 results @ Argus - Pinterest reported slowing user growth during 1Q20. Although user growth was still solid at 26%, U.S. growth slowed to 6%. Investors expected Pinterest to grow users more rapidly during the quarter as shelter-at-home took effect. Pinterest posted a non-GAAP loss of $0.10 in the first quarter, worse than expectations for a $0.09 loss. International advertising ARPU for Pinterest more than doubled in 2019 compared with 2018. However, monetization of U.S. users has slowed, along with U.S. revenue growth. We believe PINS remains a solid long-term story, but the company is at risk of lagging peers in the intermediate term. On that basis, we are lowering our near-term rating on PINS to HOLD.
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Pivotal Research Group raises their PINS tgt to $22 from $19.50. Analyst Michael Levine said, "Pinterest revenue and MAUs came in at the high end of the pre-announced guidance on April 7th, with revenue of $271.9mm (guide of $269-272mm) and 367 MAUs (guide of 365-367). We are slightly raising estimates, but we framed post-FB EPS that we were likely too low for PINS. In terms of quarterly linearity, management indicated on the callback that pre-Covid growth was in the mid-40% range. This was shaping up to be a solid quarter, but they decelerated more meaningfully than peers to down 8% y/y in April. Management indicated that deceleration has ‘stabilized' during April and into the month of May at these lower levels. Particularly after the strength seen at SNAP and FB, expectations were much higher going into the print, with a whisper of revenues pacing up 5-10% y/y and street in print at +3%, driven by the strongest mix of CPG/eCommerce in the group. Management clearly indicated some of the weakness is from advertisers turning off, so we will be closely monitoring how well they are able to get back onto advertiser's plans."