Here Are Reasons Why Pinterest (PINS) Has a Significant Opportunity to Resume Earnings Growth


Meridian Funds, managed by ArrowMark Partners, released its “Meridian Contrarian Fund” fourth quarter 2023 investor letter. A copy of the same can be downloaded here. Optimism started to prevail, during the last months of the year, and investors reacted positively to news of a potential change in direction by the US Federal Reserve, as well as indications that the US economy is heading for a soft landing. In the fourth quarter, the fund returned 8.80% (net) compared to a 13.3% return for the Russell 2500 Index. Furthermore, the fund underperformed its secondary benchmark, the Russell 2500 Value Index, which returned 13.76% during the same period. In addition, you can check the top 5 holdings of the fund to know its best picks in 2023.

Meridian Contrarian Fund featured stocks like Pinterest, Inc. (NYSE:PINS) in the fourth quarter 2023 investor letter. Headquartered in San Francisco, California, Pinterest, Inc. (NYSE:PINS) operates a visual discovery engine. On April 2, 2024, Pinterest, Inc. (NYSE:PINS) stock closed at $35.13 per share. One-month return of Pinterest, Inc. (NYSE:PINS) was 1.47%, and its shares gained 28.54% of their value over the last 52 weeks. Pinterest, Inc. (NYSE:PINS) has a market capitalization of $23.853 billion.

Meridian Contrarian Fund stated the following regarding Pinterest, Inc. (NYSE:PINS) in its fourth quarter 2023 investor letter:

Pinterest, Inc. (NYSE:PINS) is a social media platform that enables visual discovery and generates revenue mainly through online advertising and e-commerce. Earnings declined after the company saw tremendous user and revenue growth in 2020- 2021 and grew operating expenses as if the pandemic-fueled growth trajectory would continue. Normalized growth trends and a macro slowdown that affected ad spend eventually hurt earnings per share. We believed that Pinterest had a significant opportunity to resume earnings growth because:

1. Pinterest has an attractive franchise and appears under-monetized vs. social media peers given how well its user experience lends itself to online shopping. 2. Its new CEO, who led commerce initiatives at Google, may portend a virtuous self-help/self-improvement opportunity to unlock monetization. 3. The high levels of operating expense growth vs. sales prior to our investment provides an opportunity for leverage and expense reductions to improve earnings.

Pinterest’s stock performed well in the quarter as the thesis played out and the company reported strong results while raising 2023 guidance. We pared back our position during the quarter due to stock appreciation and as the investment becomes less contrarian as our thesis plays out.”

Photo by Szabo Viktor on Unsplash

Pinterest, Inc. (NYSE:PINS) is not on our list of 30 Most Popular Stocks Among Hedge Funds. At the end of the fourth quarter, Pinterest, Inc. (NYSE:PINS) was held by 66 hedge fund portfolios, compared to 63 in the previous quarter, according to our database.

We discussed Pinterest, Inc. (NYSE:PINS) in another article and shared TimesSquare Capital U.S. Mid Cap Growth Strategy’s views on the company. In addition, please check out our hedge fund investor letters Q4 2023 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.



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2024-04-03 10:16:47

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