Microsoft has approached Pinterest in recent months as the software giant was interested in acquiring the company, the Financial Times has learnt. Shares of the social media company were up by almost 8% in pre-market trading.
Negotiations are currently not ongoing, the FT report said. As of Feb. 10, Pinterest (PINS) had a market capitalization of $50.9 billion. The social media company has indicated in the past that it wants to remain an independent company, the report said.
Meanwhile, Microsoft (MSFT) has been pursuing a buying strategy to put together a portfolio of social media companies or “active online communities” that could run on its cloud computing platform, according to the FT.
Microsoft’s cloud platform Azure saw 50% growth during the most recent fiscal second quarter, as more enterprises shift to cloud computing.
Pinterest reported non-GAAP diluted EPS of $0.43 in its most recent fourth quarter, which came in ahead of analysts’ estimates of $0.32. Revenue during the quarter grew by 76% year-on-year to $706 million, beating consensus estimates of $645.6 million.
The company’s global monthly active users (MAUs) grew 37% year-on-year to 459 million and average revenue per user (ARPU) increased 29% year-on-year to $1.57 in 4Q. (See Pinterest stock analysis on TipRanks)
On Feb. 5, Credit Suisse analyst Stephen Ju raised Pinterest’s price target from $74 to $81 but kept a Hold rating on the stock.
“Everything fell into place for Pinterest in 2020 as its inherent content discovery function rose in utility to the consumer suffering through various levels of shelter-in-place,” Ju wrote in a note to investors.
Based on management guidance for 1Q FY21, the analyst believes that Pinterest’s momentum is likely to continue.
The rest of the Street is cautiously optimistic about the stock with a Moderate Buy consensus rating. That’s based on 15 analysts suggesting a Buy and 7 analysts recommending a Hold. The average analyst price target of $89.88 implies 11% upside potential to current levels.
News sentiment around Pinterest over the last seven days has been bullish, with 100% of the articles published being positive, compared to a 66% bullish sector average.