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Is Pinterest Ready to Pin Its Way to Success?
Stock Analysis & Ideas

Is Pinterest Ready to Pin Its Way to Success?

Story Highlights

Shares of Pinterest have been under pressure lately due to the recent MAU declines as a result of rising competition. The company is also transitioning from a founder-led leadership to hiring Bill Ready as CEO. Will this transition spell success for PINS? Let us look at what analysts are saying.

On June 28, Pinterest (NASDAQ: PINS) announced that its Co-Founder, Chief Executive Officer, and President, Ben Silbermann, will assume the newly created role of Executive Chairman, and Bill Ready will become the new CEO and a member of the Board of Directors, effective June 29.

Prior to joining Pinterest, Ready served as President of Commerce, Payments & Next Billion Users at Google (GOOGL).  

Silbermann commented on this transition, “In our next chapter, we are focused on helping Pinners buy, try and act on all the great ideas they see. Bill is a great leader for this transition. He is a builder who deeply understands commerce and payments. And he shares our passion for creating a positive corner of the Internet. I’m confident he’s going to be an outstanding CEO.”

Following the news, shares of PINS were up around 3.7% on Wednesday in pre-market trading. However, while investors seem to have greeted this news with optimism, Rosenblatt Securities analyst Barton Crockett remained in a wait-and-watch mode.

In his research report, Crockett outlined his reasons for the cautious stance on this move. One primary reason was that, though Ready has prior experience at Google, Crockett remains concerned that “Ready lacks experience growing social media audiences, which is arguably Pinterest’s biggest challenge now.”

In addition to the aforementioned factor, Crockett believes that an increase in operating costs of about 40%, declining monthly active users (MAUs), “tied to post-pandemic behavior changes, competition from TikTok, and changes to Google search algorithms,” has put the social media company under further pressure.

Moreover, the analyst pointed out that even as Silbermann will move into the position of Executive Chairman, “his 50.6 million shares are 8% of Pinterest’s equity” and he still retains 43% of the voting stake. This stake, in combination with founder Paul Sciarra’s 33% voting stake, will result in Silbermann still having effective control of the company.

The analyst does not see this changing anytime soon. As a result, Crockett remained sidelined on the stock with a Hold rating.

Besides Crockett, other Wall Street analysts are also sidelined on the stock with a Hold consensus rating based on five Buys and 17 Holds. The average PINS price target of $27.30 implies 38.6% upside potential.

Bottom Line

The trend of declining MAUs can also be gauged from PINS’ website traffic tool on TipRanks. This tool indicates that quarter-to-date, total unique visitors to PINS on all devices have declined 27.8% year-over-year.

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