Should Your Portfolio Include PINS Stock Post Modest Q2 Results?

Globe and Mail

3 days ago

Pinterest, Inc. PINS reported modest second-quarter 2025 results, wherein the bottom line missed the Zacks Consensus Estimate while revenues beat the same. The San Francisco-based Internet content provider reported revenue growth year over year, driven by strong momentum in all regions. Management's focus on improving shoppability and monetization potential across the platform and the incorporation of advanced AI-integrated tools to support advertisers and retailers led to top-line growth.
PINS Rides on Unique Content
Buoyed by greater user engagement, Pinterest has created a niche in the digital market platform. It primarily caters to the 'discovery' mindset of people who turn to the platform to get more information on various subjects like weddings, fashion or fitness, but are not necessarily looking for a specific item. They are there to discover or be inspired, which presents an appealing opportunity to advertisers, as users are often very open to purchasing.
Pinterest is increasingly establishing a unique value proposition to advertisers that could provide a competitive advantage in the long run. Through various innovations, it continues to improve the advertising platform, which appears to be one of the best ad platforms for consumer discretionary brands looking for new ways to reach customers and stretch smaller ad budgets. Pinterest's Verified Merchants Program allows brands to create a catalog of shoppable products on the app and use special retargeting capabilities in their ads.
In addition, Pinterest is taking various initiatives to bring more actionable content on the platform from a wide range of sources such as users, creators, publishers and retailers. This has resulted in a solid improvement in engagement metrics like sessions, impressions and saves across all regions. Healthy traction in emerging verticals like men's fashion, auto, health and travel are tailwinds.
Holistic Growth Buoys PINS
The company's focus on improving operational rigor and the incorporation of sophisticated AI (artificial intelligence) models to enhance relevancy and personalization is likely to bring long-term benefits. Pinterest is also emphasizing building new ad tools and formats to help grow the scope of monetization on the platform. This will enable advertisers to measure the results and conversion rates, which will improve their decision-making. It has partnered with Amazon.com, Inc. AMZN to further capitalize on the commercial intent of its user base and increase shoppability on its platform.
The buyout of the AI-powered, high-tech fashion-shopping platform, The Yes, has enabled it to create a strategic organization to help steer the evolution of its features and merchants. Pinterest and The Yes share a common vision of making it easy for customers to find products matching their tastes and styles. The combined company has been making continuous efforts to absorb creators publishing videos and live streams to make the shopping experience swift and easy for customers.
High Operating Costs Weigh on PINS Margins
Despite healthy growth potential, Pinterest expects operating expenses to increase substantially in the near term as it expands operations domestically and internationally, enhancing product offerings, broadening user and advertiser base, expanding marketing channels, hiring additional employees and developing technology. Increased infrastructure spending related to user and engagement growth is likely to result in higher cost of revenues. Moreover, growing investments in data center infrastructure, sales & marketing and research & development continue to strain margins.
In addition, Pinterest faces significant competition from larger, more established companies that provide their users with a variety of online products, services, content (including video) and advertising offerings, including web search engines, social networks and other means of discovering, using or acquiring goods and services. PINS also faces competition from smaller firms, which offer users engaging content and commerce opportunities through similar technology, products and features or services.
Price Performance
Pinterest has gained 17% over the past year compared with the industry 's growth of 43.5%. It has outperformed its peers like Snap Inc. SNAP but lagged Meta Platforms, Inc. META over this period. While Meta has surged 49.5%, Snap has declined 21.2% during this period.
One-Year PINS Stock Price Performance
Image Source: Zacks Investment Research
Estimate Revision Trend for PINS
Earnings estimates for Pinterest for 2025 have increased marginally to $1.81 over the past seven days, while the same for 2026 has remained static. The positive estimate revisions depict that investors are bullish about the stock's growth prospects.
End Note
Pinterest is witnessing solid net sales growth backed by strong user engagement across all regions. Enhancements in shopping ads and API for conversions are providing a sustained return on investment to advertisers. Through third-party ad integration with Google, Pinterest aims to introduce monetization opportunities in several unmonetized international markets. The uptrend in estimate revisions further signifies bullish sentiments for the stock.
However, increasing competition from other video-centric consumer apps is likely to adversely impact user engagement to some extent. High operating expenses to expand operations and incorporate the latest technological innovations are expected to dent its profitability. With a Zacks Rank #3 (Hold), Pinterest appears to be treading in the middle of the road and investors could be better off if they trade with caution. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
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