Social media company Pinterest reported stellar first-quarter results and its stock is now at a 52-week high.
My stock portfolio is not very concentrated, and the “biggest” stock investment in it has changed several times over the past few years due to price fluctuations. About a week ago I logged into my brokerage account and saw that it had changed again: a social media company. Pinterest (pin -0.19%) It is currently the largest stock investment in my portfolio.
Admittedly, when I bought Pinterest, I didn’t necessarily expect it to become my largest stock investment. But I bought most of my position during the COVID-19 market crash for about $15 per share. At the time, the stock looked abnormally cheap, so I thought it was a great position at the time. Four years later, the stock is up about 170%, and with the recent surge after the earnings release, it’s now my largest individual stock investment.
Although Pinterest has performed very well in my portfolio, I have no intention of selling it anytime soon – not only does it make up a significant percentage of my total assets (about 10% of my stock portfolio), but selling is generally not a good idea. just Because as long as the investment thesis holds true, the stock price will go up, and I believe Pinterest is an even stronger business today than it was when I bought it.
Strong First Quarter Numbers
As mentioned above, Pinterest shares soared after its first-quarter numbers were released, and it’s easy to see why: A combination of unexpectedly strong user growth and monetization helped Pinterest’s revenue grow 23% year over year, its highest growth rate since 2021, when the company was benefiting from pandemic-era tailwinds.
Monthly active users (MAUs) were the biggest surprise, reaching 518 million (a new record), up 12% from a year ago. Needless to say, Pinterest is growing users faster than any other company in the social media space. Pinterest’s focus on e-commerce tools and incorporating artificial intelligence (AI) into its user experience seems to be paying off.
Plenty of room to grow
Pinterest may still be in the early stages of its growth story, especially when it comes to international users. Fewer than 19% of users are in the US and Canada, but this segment accounts for 80% of revenue. Average revenue for US/Canadian users was $6.05 in Q1, while average revenue for European users was just $0.86, and average revenue for the rest of the world’s 279 million active users was just $0.11.
It’s hard to overstate the huge opportunity Pinterest has when it comes to monetizing international users. While the company will likely never make as much money from them, closing the gap would be a big win.
Plus, Pinterest is likely to maintain its user growth momentum for some time to come — by comparison, it has roughly one-sixth the number of active users that Google has. Meta Platform Facebook. I don’t think it’ll hit 3 billion users anytime soon, but if Pinterest keeps up its current growth rate, it could double its user base over the next 5 years or so.
Finally, Pinterest has done a good job of managing its expenses in line with its growing revenue, which should lead to improved bottom-line profitability as the business scales.
I don’t sell stocks
In summary, Pinterest shares have performed surprisingly well, but I believe this is more than justified by the company’s performance. The progress made since CEO Bill Ready took over has been impressive, and I have no plans to sell any shares, as I’m excited to watch the next chapter of the growth story unfold.
Randi Zuckerberg is a former director of market development and public relations for Facebook, sister of Meta Platforms CEO Mark Zuckerberg, and a member of The Motley Fool’s board of directors. Matt Frankel invests in Pinterest. The Motley Fool has invested in and recommends Meta Platforms and Pinterest. The Motley Fool has an investment policy.
