In pre-market trading on Friday, Pinterest stock is up more than 9% after the social media firm revealed better-than-expected earnings for its third quarter.
Compared to analysts’ predictions of $0.06 per share on sales of $665.5 million, Pinterest reported $0.11 per share after adjusting for one-time items on revenue of $685 million.
Pinterest (NYSE:PINS) topped the expected 440.1 million monthly active users (MAUs) by reporting 445 MAUs. Again exceeding expectations, ARPU came in at $1.56, above the $1.53 forecast. Compared to the expected 6.1%, the reported 11% adjusted Ebitda margin is a huge win.
Pinterest anticipates growth in sales in the mid-single digits for the current quarter. In addition, the business’s adjusted operating expenditures are expected to increase by 35% annually. On the results call, management was less upbeat, saying that October was on pace to be at the low end of the projection range but that they anticipate things to go up by the end of the quarter.
Analysts at Morgan Stanley have indicated the findings are encouraging. They anticipate that Pinterest stock investors will keep their attention on execution concerns until 2023.
“The third quarter’s earnings were better than anticipated, and the company’s leadership has shown promising early execution on critical goals. A poorer 4Q forecast and (possibly) escalating consumer weakness into ’23 generate uncertainty and force us to decrease ests. Still, the comeback will be worth the wait, “According to the analysts.
Pinterest’s results are a “rare bright light so far during earnings season,” according to analysts at Stifel, because of the company’s stable user base and rising levels of engagement.
Although we are heartened by these developments, we believe it is prudent to wait until we have thoroughly evaluated the near-certain margin increase narrative in light of the current advertising climate.
Pinterest stock shoots up after a solid third quarter, which is seen as a “rare bright spot.”
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