Why Pinterest Stock Popped This Week

Pinterest soared after a strong first-quarter earnings report.

Shares of Pinterest (PINS -0.22%) were among the winners this week, as the image-based social media company posted better-than-expected results in its first-quarter earnings report.

The company also issued strong guidance for the second quarter. As a result, the stock was up 19% for the week as of Friday at 2:30 p.m. ET.

A woman looking at Pinterest on an iPad

Image source: Pinterest.

Pinterest scores a big win

After the business took a significant step back in the aftermath of the pandemic, Pinterest has returned to steady growth, and the recent report increased confidence in the company’s future.

In the first quarter, revenue increased 23% to $740 million, which easily beat estimates at $699.9 million.

That growth was supported by a 12% increase in global monthly active users to 518 million, and average revenue per user (ARPU) was up in every segment, rising 10% globally.

On the bottom line, Pinterest also impressed, with adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) improving from $27 million to $112.9 million. Profit also benefited from slashing general and administrative expenses and slowing growth in other categories, which seemed due in part to layoffs a year ago. Adjusted earnings per share also increased from $0.08 to $0.20, ahead of the consensus at $0.13.

CEO Bill Ready said, “Thanks to our investments in AI and shoppability, we’re driving even greater returns for advertisers and gaining access to performance (advertising) budgets.”

What’s next for Pinterest

Investors were also impressed with Pinterest’s guidance for the second quarter. The company sees revenue rising 18%-20% to a range of $835 million-$850 million, ahead of the consensus at $826.5 million.

Pinterest also expects to gain leverage on the bottom line, as it sees expenses growing more slowly.

Pinterest remains a unique property in social media, and it looks poised to deliver steady growth now that the volatility of the pandemic is behind it. Keep your eye on user growth and ARPU. If those continue to move in the right direction, the stock should keep gaining.

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