Pinterest Inc (NYSE: PINS) is a social media website headquartered in San Francisco, CA, USA. Its website consists of a software application that enables users to save and discover information, primarily images, but also including GIFs and videos on a smaller scale. The site was founded in 2009 by Ben Silbermann, Paul Sciarra, and Evan Sharp. In its little over a decade of existence it has grown to over 300 million monthly active users.
Besides being just a social media site, Pinterest has been described by founder and CEO Ben Silbermann as a “catalogue of ideas” which inspires its users to “go out and do that thing.” In that respect Pinterest is a visual discovery engine. It is unique and operates in a narrow niche with very little direct competition.
The site has been able to grow so rapidly because its visual discovery platform acts as a virtual scrapbook for users. They can create Pinboards to save images and videos that might be inspiration for travel, home decorating and remodelling, weddings, and even their favourite recipes. Pinterest also includes an image recognition feature where users can take pictures with a smartphone, upload them to Pinterest, and get related information and ideas.
Pinterest has become increasingly important to businesses as its marketing services allow business to connect with consumers based on a set of shared interests and tastes.
Pinterest: The Beginnings
The creation of Pinterest began in December 2009, with the site launching in a closed beta just a few months later in March 2010. The site grew to 10,000 users within its first 9 months. Silbermann, Sciarra, and Sharp operated Pinterest with a few other programmers from a small apartment until the summer of 2011.
August 2011 was a key month for Pinterest’s future. It was listed by Time magazine as one of the 50 best websites of 2011, kicking off faster growth. By December 2011 it was one of the 10 largest social network services, with nearly 45 million monthly visits. In January 2012 Pinterest drove more referral traffic to retailers than Google+, YouTube, or LinkedIn. It was also named the best new start-up of 2011 by TechCrunch.
Noted early investors of Pinterest include: Jack Abraham of investment fund Atomic, Scott Belsky, Brian Cohen, Shana Fisher, and FirstMark Capital.
Businesses and Pinterest
The rapid growth of the Pinterest social network has attracted retailers and other businesses to the site in an effort to expand their footprints and branding. Pinterest has served businesses by creating “business pages” which allow them to create virtual pages on the site to promote their own businesses and products. These pages are like a virtual storefront for the businesses using them. And they seem to be extremely effective.
One case study showed visitors to a fashion website that came from Pinterest spent $180 on average in comparison with an average of $80 spent by users coming from Facebook. The Pinterest visitors also spent less time on the fashion website, choosing instead to browse the company’s Pinboard.
The Typical Pinterest User
The audience at Pinterest tends to be predominantly females, and there is also a tendency towards higher levels of education, and higher than average income. As females have been determined to control as much as 80% of household spending in the U.S. this makes Pinterest extremely important for marketers and advertisers. Pinterest has also been found to have better reach in suburban and rural areas, as well as better reach for older users.
Advertisers are attracted to the differentiated audience at Pinterest. They have also found that Pinterest gives them a user base which is more prepared to make purchases, and who appreciate relevant advertising. This is quite different from most online platforms where users are offered a service they value, and then advertising is thrown on top of that, causing a disruptive experience for users.
Based on research by brand strategy consultant and advertising development firm Kantar Millward Brown, 96% of Pinners report using Pinterest to research and gather information, 93% report using Pinterest to plan for purchases, and another 87% report Pinterest helping them decide what to purchase.
Monetization is one of the largest factors investors consider when looking at social media stocks. Pinterest has been penalized in some respects because it is still in the early stages of discovering how to best monetize its audience. Current offerings for advertisers include Promoted Pins. Pinterest is actively working to improve ad relevance for users, while also building an advertising platform to help advertisers deliver value. Because Pinterest advertising is relatively new some growing pains should not be unexpected.
Even though Pinterest has obvious advantages for advertisers, especially retail sites, the average revenue per user at Pinterest significantly lags its peers. This has been a concern for investors, but is likely nothing more than the immaturity of the Pinterest advertising platform. Average revenue per user is almost sure to trend higher as Pinterest improves its advertising services and targeting, and as advertisers become increasingly comfortable using the service. Considering the advantages for advertisers using Pinterest it seems fair to say that average revenue per user should eventually match or even exceed that found at Twitter and Snapchat.
Pinterest Stocks Historical Prices
Pinterest (NYSE: PINS) stocks began trading in April 2019, debuting at $23.75, which was well above the $19 IPO price set for the stock. By the end of April shares had reached a high of $35.29, or nearly double the IPO price. The following month wasn’t nearly so good, as Pinterest stocks retraced the post-IPO gains, trading as low as $23.60 and closing the month out at $24.40, which is nearly where it began.
Shares popped higher from there as Pinterest reported strong second and third quarter revenue and user growth. By August 2019 shares were trading at an all-time high of $36.83 a share. The gains weren’t going to last though as investors began to worry about monetization at Pinterest. After all, what good is it to have 300 million users if you can’t make money off them?
By December 2019 shares were at an all-time low of $17.39, which was below the IPO price of Pinterest stocks. The following month saw some improvement, but as of mid-January 2020 shares weren’t much better off than at the IPO, trading at $19.78 a share.
Pinterest Stocks Trading Ideas
Pinterest shares came under pressure in late 2019 over growth concerns as the social network struggles to monetize its user base. While it is fairly certain that monetization will improve, the company needs to prove it to investors. That said, it is pretty clear that shares are undervalued and present investors with significant upside potential in light of the unique nature of the platform.
Trading around earnings releases, or at least based on the results and guidance from the quarterly earnings releases, is going to be the best strategy. More aggressive traders can place their stock trades ahead of the earnings releases based on their own analysis of how strong (or weak) they feel the results were be. Those who are more conservative may want to wait until after earnings are released and trade based on the presumption that shares will trade over the following three months based on the quarterly results.
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AvaTrade Pinterest Stock Trading Information
- Pinterest Stock Symbol: #PINTEREST
- Trading Times: Monday – Friday 14:30 – 20:59 GMT
- Country: USA
- Currency: USD
- Exchange: NYSE
- Leverage up to:
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