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- A Stock to Bounce On Q3 Earnings Agenda: Pinterest
A Stock to Bounce On Q3 Earnings Agenda: Pinterest
Pinterest stocks (PINS) added 19.16% to its market value in one trading session on October 31. Its total revenue for the financial year of 2023 reportedly grew by 11.5%, as it reached $763.2 million in Q3, compared to the average analyst's estimate of $743.94 million on Reuters. Pinterest's unique position as a specialized visual search, combined with a discovery and shopping platform, allowed it to surpass consensus expectations by far this time.
The company's EPS (equity per share) saw a solid increase to $0.28, up from $0.11 a year ago, against $0.21 in the previous quarter. The free cash flow of Pinterest soared by 73.7% from the previous quarter, amounting to $107.5 million, which shows a better spending discipline. Its gross margin rose from 73.3% to 77.6%. Monthly active users of the platform added 37 million users, so that its total user base exceeded 482 million. The company's own forward guidance for Q4 supposed a 12% YoY revenue growth. Its CEOs said that advertisers' spending on its platform has been relatively resilient, in contrast to its peer Snap, for example.
Another reason behind this stock's sharp rally right now is that it already lost more than 70% of its peak price of spring 2021. The company is still trading at a high Price/Book ratio of 6.63 and with a negative P/E ratio of -58.29, holding more cash than debt on its balance sheet, with its liquid assets exceeding short-term obligations. The strong financial position and pretty good income dynamics allows us to expect that Pinterest will be increasingly profitable in 2024.
Analysts of the Bank of America (BofA) upgraded the stock's rating from ‘Neutral’ to ‘Buy’, setting its price target at $37, which means potentially a +30% upside. Pinterest is also much closer to the start of the Amazon deal ramp, with a possible acceleration in the first half of 2024. As for our estimates, we expect to see a $50 retest, relying on possible Fibonacci retracement projections, as the stock looked extremely overweight in over 15-month period.
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