PinterestNYSE: PINS

Weaker revenue guidance caused Pinterest (PINS) stock to fall over -15% last Friday but investors may wonder if the post-earnings selloff is overdone.

Pinterest has a very strong EPS Rating of 97 out of a best-possible 99. The post Pinterest Stock Up As Analyst Turns Bullish.

Pinterest's Q3 FY24 earnings showed 18% YoY revenue growth and 31% YoY Adjusted EBITDA growth, driven by increasing MAUs and advertiser spend. However, investor confidence dropped due to declining ad pricing in international markets and concerns over AI investments impacting profitability, but I see these as temporary issues. I believe its long-term growth story is alive from growing Gen Z user base and AI-driven user engagement improvements, which should result in higher advertiser spend, supporting a price target.

Pinterest's Q3 update showed strong fundamentals with 11% user growth and 18% revenue growth, yet the stock fell 16%, presenting a buying opportunity. CEO Bill Ready's focus on AI and platform enhancements has driven significant engagement and monetization improvements, especially among Gen Z users. Due to the price drop and earnings growth, Pinterest's Owner's Yield has increased to 11.7%, indicating strong potential returns with continued revenue growth and efficient R&D spending.

Investors clearly had their hopes pinned on a better forecast for Pinterest when the company announced its Q3 2024 results and Q4 forecast yesterday.

Pinterest reports a top-line expansion year over year, driven by solid user engagement across all regions.

Pinterest's Q3 earnings beat expectations, but sluggish U.S. user growth and declining ad pricing led to a >10% drop after-hours. I am downgrading Pinterest to a sell due to weaker user growth, lack of a competitive moat, and potential negative impacts from increased ad load. Despite 18% y/y revenue growth, ad pricing fell 17% y/y, raising concerns about the sustainability of Pinterest's monetization strategy, especially overseas.

Shares in the social-media platform are already down 8% this year, as of Thursday's close.

Pinterest (PINS) shares slumped about 16% Friday morning after the social media company's third-quarter net income fell short of estimates.