Is Pinterest stock worth buying?

Digital Staple Board WebsitePinterest (New York Stock Exchange)Stock Code(PINS)The stock has experienced a resurgence in the past few months. The stock hit a new 52-week high of $41.60 in February.

That's a reversal from the 52-week low of $20.60 hit last May. The company's growth in monthly active users (MAUs) and revenue last year drove the stock's turnaround.

Since then, the stock has fallen from its February highs. But does this signal a buying opportunity?

To decide whether or not to snap up Pinterest stock, it's important to understand whether or not the company's industry merit is sustainable over the long term. To that end, let's take a closer look at Pinterest.

The Success of Pinterest User Growth

Pinterest ended 2023 on a glorious note. The company reported a record 498 million monthly active users in the fourth quarter, a jump of 11% from 2022. this led to revenue of $3.1 billion in 2023, up from $2.8 billion the previous year.

Last year's increase in MAUs wasn't a fluke, as Pinterest's Koon team set new priorities for the company after first-time CEO Bill Ready took over at the top in the summer of 2022. One of those priorities is to increase the number of users on the Pinterest platform.

The company is accomplishing this with the help of artificial intelligence (AI), which Pinterest uses to find and recommend content that matches each user's specific interests to keep users engaged on the platform.

In 2023, Pinterest also added new features, such as the collage feature, which allowed users to clip images from their content collections and group them together. Most users who have adopted the collage feature are those who have never pinned content on Pinterest before, suggesting that the feature has been successful in attracting new users.

Pinterest's Compelling Financial Data

In addition to user growth, the company is also working to increase its average revenue per user (ARPU), a problem that Pinterest is addressing in a number of ways. First, the company has more than doubled the number of ad products it offers to marketers who want to advertise on the platform.

Second, Pinterest is working with other businesses to help deliver more ads to its曏 users. These partners includeAmazonrespond in singingAlphabet'sGoogle. For example, Pinterest shows users Amazon ads. When users click on these ads, they are taken to Amazon to make a purchase.

As a result of these efforts, Pinterest's global ARPU rose from $6.36 in 2022 to $6.44 by the end of 2023. What's more, ARPU in North America rose from $24.38 in 2022 to $25.52 last year. The region generated $2.4 billion of Pinterest's $3.1 billion in revenue in 2023.

Despite the increase in sales, Pinterest is not profitable. in 2023, the company reported a net loss of $35.6 million. However, profitable growth is one of Pinterest's business priorities.

As a result, the Company made cost reductions in 2023 and, as a result, last year's net loss was reduced by $63% compared to the $96 million loss in the prior year.

In addition, the company's balance sheet in 2023 is excellent. Its total assets of $3.6 billion far exceed its total liabilities of $503.7 million. Cash, cash equivalents and marketable securities alone amounted to $2.5 billion.

Deciding Whether to Buy Pinterest Stock

Pinterest has had success under Bill Ready so far, and the company expects to continue to grow in 2024. pinterest is forecasting first-quarter revenues of at least $690 million, a double-digit increase from the $603 million it will generate in 2022.

The company is showing positive momentum, which is also helping its stock price. In fact, Wall Street analysts have a median price target of $44.30, and the consensus among these analysts is now a Hold rating for Pinterest stock.

One question is whether Pinterest can achieve greater ARPU growth outside of North America, Ready noted, noting that Pinterest's roughly 80% of users are located around the world, but only account for 20% of revenue.

The company hopes to gradually increase its international ARPUs through its partnerships with Google and Amazon. pinterest is also working to build more name partnerships to help realize international ARPU growth.

Growing MAUs, a strategy to increase ARPU, and solid financials show that Pinterest is on the right track under Ready's leadership. This makes Pinterest stock a worthwhile long-term investment as the company continues to strive for greater revenue growth and profitability over the next three to five years.

Should You Invest $1,000 in Pinterest Now?

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John Mackey, former chief executive officer of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an Alphabet executive, is a member of The Motley Fool's board of directors. Robert Izquierdo serves on the boards of Alphabet, Amazon, and Pinterest. Robert Izquierdo works at Alphabet, Amazon, and Pinterest. The Motley Fool owns and recommends stock in Alphabet, Amazon, and Pinterest.

Is Pinterest Stock Worth Buying? This post was originally published by The Motley Fool.