Why Pinterest Stock Soared 19% in August

This 2019 social-media IPO’s stock chart was “pin”-worthy last month.

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What happened

Shares of newly public social-media company Pinterest (NYSE: PINS) jumped 18.7% in August, according to data from S&P Global Market Intelligence. For context, the S&P 500, including dividends, fell 1.6% last month.

While shares pulled back 11.8% during the holiday-shortened first week of September, they’re still up more than 59% since the San Francisco-based company’s April initial public offering at $19 per share.

Pinterest’s platform allows users to visually share — by “pinning” images and videos to their boards — and discover products and projects by browsing what others have pinned. As with social-media titan Facebook, the company makes it money from advertising.

Image source: Getty Images.

So what

We can attribute Pinterest stock’s strong performance last month to the company’s Aug. 1 release of second-quarter results that crushed Wall Street’s expectations and to management increasing full-year 2019 guidance. Shares surged 18.6% on the day following the release.

In Q2, Pinterest’s revenue soared 62% year over year to $261.2 million, easily beating the consensus estimate of $235.5 million. Revenue growth was driven by a 30% increase in monthly active users (MAUs) to 300 million and a 29% rise in average revenue per user to $0.88.

As is typical for a newly public company, Pinterest isn’t profitable. It posted an adjusted net loss of $24.5 million, or $0.06 per share, a 28% improvement from the year-ago period’s $34.2 million net loss.  Nonetheless, the adjusted bottom line beat the $0.08 loss-per-share that the Street was expecting. On the basis of GAAP (generally accepted accounting principles), Pinterest turned in a net loss of $1.16 billion, though much of that loss was due to expenses associated with the company’s IPO.

Now what

For full-year 2019, Pinterest now expects revenue to be $1.095 billion to $1.115 billion, up from its previous outlook of $1.055 billion to $1.08 billion. It also guided for adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) of negative $50 million to negative $25 million, up from its prior expectation of negative $70 million to negative $45 million.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Beth McKenna has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Facebook. The Motley Fool owns shares of Pinterest. The Motley Fool has a disclosure policy.

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