Should I sell Pinterest shares after Q4 results?
- Pinterest reported better than expected Q4 results
- Monthly active users decreased 6%
- $20 represents strong support
Pinterest, Inc. (NYSE: PINS) shares remain under pressure even though the company reported strong fourth-quarter results last week.
Pinterest is an image sharing and social media service that allows people to find inspiration for their lives, including recipes, style, home inspiration, DIY, and others, and provides video, product, and idea pins.
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The company reported strong fourth-quarter results last Thursday; total revenue has increased by 19.9% Y/Y to $846.66 million, slightly above expectations, while the non- GAAP earnings per share were $0.49 (beats by $0.03).
Pinterest surpassed $2.5 billion in revenue for the 2021 fiscal year, representing an increase of 52% compared with the 2020 fiscal year.
It is also important to mention that Pinterest posted its first full year of GAAP profitability, and the company continues to invest in a number of opportunities to monetize its existing supply and to help advertisers achieve their goals.
Negative information is that monthly active users decreased 6% year-over-year to 431 million. According to the company’s management, the main reason for this decrease came from the continued unwinding of the pandemic and increasing competition. Ben Silbermann, CEO of Pinterest, added:
We’re clear-eyed about these recent headwinds, and we believe that over the long term, our new publishing platform will deep engagement by Pinners. We’re also continuing to improve the core experience to help surface the most relevant content at the right time.
The number of monthly active users in the US declined 12% in the fourth quarter to $86 million, but the team behind this company is taking many steps to increase engagement on Pinterest.
Pinterest began the first quarter of 2022 with solid momentum in business activity, and it expects that revenues will grow in the “high teens percentage range” in the first fiscal quarter.
Fundamentally looking, Pinterest trades at more than forty times TTM EBITDA, the book value per share is less than $5, and we can notice that this stock is not undervalued.
$20 represents strong support
Pinterest’s stock price has fallen more than 65% after reaching the highest level in 2021 of $89.90 on February 16, and the risk of further decline still persists.
The important support level stands at $20, and if the price falls below this level, it would be a strong “sell” signal.
On the other side, if the price jumps above $30 resistance, it would signal trading shares, and the next target could be at $35 or even above.
Pinterest reported better than expected fourth-quarter results last week, and the company’s management is taking a number of steps to increase engagement on Pinterest. Pinterest surpassed $2.5 billion in revenue for the 2021 fiscal year, which represents an increase of 52% compared with the 2020 fiscal year.