Pinterest
turned in stronger quarterly earnings and revenue than expected, bolstering analysts’ confidence about the social media site’s growth prospects. Its stock was surging.
For the third quarter, adjusted earnings per share came in at 28 cents, while revenue was $763 million, the company said Monday. Analysts had expected a per-share profit of 20 cents and revenue of $744 million.
Pinterest, which makes money by selling ads, said it expects revenue to grow by 11% to 13% in the current quarter versus a year ago. The midpoint of that range, at 12%, compares with the 11.4% projected by analysts.
These gains come as Pinterest attracts advertisers. During the third quarter, the company launched a product called Direct Links that takes people from a Pinterest ad to a retailer’s website. Management noted a 26% year-over-year increase in ad impressions, a metric measuring views of posts.
CEO Bill Ready said the firm is laying the ground for more third-party partnerships after deciding in April to start showing Amazon.com‘s (AMZN) Sponsored Product ads on its platform.
Pinterest reported a record 482 million monthly active users globally for the quarter, up 8% from the same period a year earlier.
Shares were 17% higher on Tuesday to trade at $29.33
The outlook for near-term growth is favorable, wrote Wedbush analyst Scott Devitt on Monday. He raised his target for the stock price to $32 from $30 earlier but continues to rate the shares at Neutral as he waits for more news on revenue and advertising growth.
Benchmark analyst Mark Zgutowicz on Tuesday wrote Pinterest is showing “nice near term momentum” in advertising, but continues to rate the stock at Hold. The firm doesn’t have a target for the stock price.
Zgutowicz said he is concerned that user growth has “clearly peaked” and that he is waiting for pricing to improve. The price of ads declined 12% in the third quarter from a year ago, the company said.
Citi analyst Ronald Josey reiterated a Buy rating and $36 price target for the stock, saying engagement and revenue growth are improving.
More than 60% of analysts tracking the stock side with Citi, rating the stock at Buy. The remainder rate it as Hold.
Write to Karishma Vanjani at [email protected].
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