Pinterest's Post-IPO Surge Passes 50% Ahead of Earnings Test

(Bloomberg) -- Pinterest Inc. reports its first results as a public company later Thursday, and investors will closely examine whether its growth prospects can justify a stock that’s surged since its April debut.

The social-media company is up more than 50% since its IPO, making it a standout at a time when other high-profile launches -- notably the ride-sharing companies Lyft Inc. and Uber Technologies Inc. -- have struggled. Yet, the rally has resulted in a valuation that is widely seen as elevated, and it may have to clear a high bar for the shares to keep advancing.

Pinterest's Post-IPO Surge Passes 50% Ahead of Earnings Test

Pinterest certainly has fans who are optimistic that the company, known for its inspiration boards, has a rosier outlook than Snap Inc. -- which has slumped since its 2017 initial public offering.

Nomura Instinet called Pinterest the “fastest-growing company in our coverage universe,” while Baird wrote that it was “emerging as one of the most-compelling consumer Internet platforms, leveraging an engaged and fast-growing audience that is still in the early days of monetization.” RBC Capital Markets predicted that the company could sustain double-digit growth in both monthly active users and average revenue per user until 2021.

The company ended 2018 with 265 million monthly active users, and a key question for the quarter will involve how it’s monetizing that base. Goldman Sachs wrote that the company’s “maturity as a service to its users” stood “in contrast with the relative immaturity of its business model.”

Pinterest generated $9 per U.S. monthly active user in 2018, equal to Snapchat, but below the $12 generated by both Yelp and Twitter, and a fraction of Facebook’s $110 average, according to Credit Suisse. Analyst Stephen Ju expects Pinterest to grow its average revenue per user to $26 over the next decade, and said commentary on its ability to monetize its international users would be a particular focus in the quarter.

Shares of Pinterest climbed as much as 3.6% Thursday in New York ahead of the release of the results.

Estimates

  • 1Q adjusted loss est. 10 cents a share (range a loss of 22 cents a share to a loss of 7 cents a share)
  • 1Q revenue est. $200.8 million (range $199 million to $202 million)
  • 1Q gross margin est. 63.3%
  • 2Q adjusted loss est. 63 cents a share
  • 2Q revenue est. $236.1 million

Data

  • 5 buys, 12 holds, 1 sell
  • Avg PT $28, implies downside of 1.4% from Wednesday’s close
  • Implied one-day share move following earnings: 12.4%

Timing

  • Earnings expected after the market closes on May 16
  • Conference call scheduled to begin at 5 p.m.

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