Pinterest comeback could still be on hiatus, warns analyst in case of demotion
Pinterest Inc. shares have lost about half of their value in the past 12 months, and a snapback may have to wait.
While the social media company proved popular at the start of the pandemic as crazed internet users searched online for inspiration, Pinterest PINS,
struggled to maintain that momentum once COVID-19 conditions improved and people started leaving their homes more. The company has seen disappointing user trends in its past two quarters, and Guggenheim analyst Michael Morris is concerned the company is still suffering from weak momentum.
Morris lowered Pinterest stocks to neutral from buying on Tuesday, while lowering his estimates on user trends. He now expects the company to report 438 million monthly active users for the fourth quarter, down from its previous estimate of 447 million.
Pinterest shares were down 9% in Tuesday’s trading.
Morris looked at data from Pinterest Ads Manager, which showed him a drop in “overall global audience reach” from November to December and marked the second consecutive month of sequential declines, though October admittedly saw the “biggest drop. total audience of 2021 “.
He also looked at third-party data from Apptopia, which showed a fourth consecutive month of sequential drops in average daily app downloads through December 15.
“With stocks under constant pressure since posting below-consensus user trends in 2Q21, we have been hesitant to downgrade in the face of potential user stabilization,” Morris wrote, but the “data indicating continued weakness in usage and another quarter of sub-consensus “prompted his last call.
He still sees opportunities for Pinterest to capitalize on its “high intent to buy user behavior,” but is also concerned about the company’s positioning: “[W]We don’t think the platform’s use case is growing as fast as its peers, which creates a risk that competitors will improve their social commerce offerings faster than Pinterest capitalizes on its position.