Pinterest: Early in its pivot towards monetisation, clear upside to ARPU

Pinterest is a productivity tool for planning ideas and getting inspiration. Its main users are millennial mothers although the pandemic allowed PINS to broaden its user base and verticals. Pinterest has so far focussed on customer experience rather than revenue. This is the opportunity: it is far behind other platforms in terms of monetisation.

• PINS trades on sensible EBITDA and EPS multiples on 2023 estimates, which we think are conservative.

• Although there was some bringing forward of customer growth because of pandemic, we believe PINS short-term cliff fears (growth slowdown) may be exaggerated and it is likely to do better than other ecommerce players.

• Social media is fragmenting and dollars are flowing to alternative destinations, not just FB and GOOG.

• We believe a material change happened in 2020, partly internal change, partly market changes due to COVID, the result is increasing monetisation, with high incremental margins and limited reinvestment needs.

Potential Upside: $101 (+52%)

Sensible Downside: $50 (-25%)

Link to research