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KeyBanc reduced its price target from $28 to $25 on Monday. This follows the company's recent earnings report where revenue missed expectations despite reaching a record number of monthly users. The new target is still higher than the current stock price of about $20. Other analysts have made similar moves recently, bringing the average target across all firms to $27. While the platform is growing its user base, the focus for many remains on how effectively it can turn those users into advertising revenue, especially in international markets.
Source: KeyBanc
After Pinterest reported its October results, we updated our fair value and cut our quality score to 3.3. We changed our rating from Buy to Watch and lowered our projections for yearly revenue and earnings per share. We cut our estimates for how much the company earns per user in Europe and have added the impact of potential trade tariffs on its largest advertisers to what we track. We have also started tracking the strategic shift following a change in the finance leadership.
Pinterest reported sales of about 1.17 billion dollars for the quarter, which was slightly below what analysts expected. While revenue grew 12 percent from last year, the company's profit of 46 cents per share also missed the target. The stock fell about 5 percent following the report.
The bright spot was user growth, which reached an all-time high of 661 million monthly active users. This suggests the platform is still popular, but the challenge remains in monetization, the process of turning those users into revenue. Pinterest is leaning on artificial intelligence and partnerships with Amazon and Google to make its visual pins easier to shop, but those efforts are not yet growing fast enough to meet Wall Street's high expectations. For long-term owners, the core question is whether this is a temporary slowdown or a sign that the shift to e-commerce is getting harder. The company is still generating healthy cash, bringing in 300 million dollars in free cash flow this quarter, but it needs to prove it can extract more value from its growing global audience to justify its valuation.
See the full quarter, and how our tracked metrics did
Source: 8-K filing
Pinterest is scheduled to release its quarterly numbers today. Analysts are looking for revenue of about 1.21 billion dollars and earnings of roughly 49 cents per share. For those following the business, the focus remains on how well the platform is turning its visual search ideas into actual shopping sales through its partnerships with Amazon and Google. We will also be watching the number of monthly active users, which recently sat at 619 million. Maintaining this scale is vital for attracting large advertisers who want to reach people with a clear intent to buy. A full analysis of the results and what they mean for the company will follow once the report is out.
KeyBanc lowered its price target from $30 to $28 on Wednesday. This adjustment brings the firm in line with the average analyst target of $28. This is a routine move ahead of tomorrow's earnings report and does not change the firm's overall rating on the stock.
Source: KeyBanc
Management has struggled to set a reliable bar, missing their own targets in five of the last eight quarters as they work to turn record user growth into actual sales.
| Expectation | |
|---|---|
| EPS | $0.80 |
| Revenue | $1.46B |