Pinterest Shares Soar on Strong Outlook. Is It Too Late to Buy the Stock?

Shares of Pinterest (PINS -1.19%) soared after the social media company reported strong results and issued an upbeat forecast. This flips the script for a stock that had come under pressure its prior two quarters due to weak guidance. As of this writing, Pinterest stock is up nearly 36% year to date but only about 7% over the past year.

Let’s look at Pinterest’s most recent results to see whether it’s too late to buy the stock.

An upbeat outlook

For the fourth quarter, Pinterest saw its revenue climb 18% year over year to $1.15 billion, just ahead of the $1.14 billion consensus as compiled by LSEG and above the high end of its $1.125 million to $1.145 million revenue guidance. U.S. and Canada revenue increased 16% to $900 million, while European revenue jumped 21% to $196 million. Revenue from its rest of world (ROW) segment soared 44% to $58 million.

Monthly active users (MAUs) rose by 11% to 553 million, led by a 15% jump to 307 million ROW users. U.S. and Canada MAUs grew by 4% to 101 million, while European users climbed by 7% to 145 million.

One of the most important metrics to look at for Pinterest is average revenue per user (ARPU), as the company has always trailed competitors when it comes to monetizing its users. Overall, ARPU grew by 6% to $2.12. However, given the large differences between regions, it’s best to look at the metric on a regional basis.

ARPU increased by 12% to $9 in the U.S. and Canada, while European ARPU grew by 12% to $1.38. ROW ARPU, meanwhile, soared 24% to $0.19.

Turning to profitability, Pinterest saw its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) surge 28% to $470.9 million. Meanwhile, adjusted earnings per share (EPS) rose by 6% to $0.56.

Looking ahead, Pinterest guided for Q1 revenue to be between $837 million and $852 million, representing 13% to 15% growth year over year, or 15% to 17% growth in constant currencies. This was well above the $833 million analyst consensus as compiled by LSEG.

Pinterest said its Performance+ platform has shown promising early results, with advertisers who have adopted it seeing a 20% improvement in cost per acquisition. Performance+ is still in its early days of implementation, and management sees it as a continued growth driver this year and beyond as it rolls out new features and functionality.

The company also said it is using artificial intelligence (AI) tools to optimize ad loads and improve ad relevancy. In addition, it’s using AI internally to help with coding, saying about 15% of its current code is now being generated by AI.

Is it too late to buy the stock?

Pinterest continues to do a good job of adding more active users and is doing a better job monetizing them. That said, it still has a lot of room to catch up to other social media players on the monetization front. Its Performance+ platform, which uses automation and AI to help advertisers boost results, is a good start in this direction. Its use of ROAS (return on ad spend) bidding is another tool that can help drive growth.

Pinterest’s platform attracts a demographic that generally has an intent to purchase, so there are a lot of opportunities for the company to continue making strides on the monetization front. Meanwhile, improving international ARPU remains a priority. The company still in the early days of partnerships with companies like Alphabet and various resellers to help better monetize these markets.

From a valuation standpoint, the stock trades at a forward price-to-earnings (P/E) ratio of about 21.5 based on 2025 analyst estimates. That’s well below competitors such as Meta Platforms and Snap.

PINS PE Ratio (Forward) data by YCharts. PE Ratio = price-to-earnings ratio.

Overall, given the opportunities in front of it, Pinterest stock is attractively valued. Performance+ and other initiatives should continue to help drive growth, and the company still has a large opportunity to close the monetization gap between competitors, especially in international markets. The company’s CEO, William Ready, has done a very nice job investing in technology and positioning Pinterest to begin taking better advantage of its large user base in the future.

As such, I do not think it is too late to buy Pinterest stock, even after the recent surge in its price. It’s still up just modestly over the past year, and it’s a nice growth stock trading at an attractive valuation.