Skip to Content
Stock Analyst Update

Pinterest Beats Q4 Expectations; Shares Look Attractive

We expect profitability to improve in 2023 and beyond.


Pinterest (PINS) posted strong fourth-quarter 2021 results which exceeded consensus estimates on the top and bottom line. While the firm’s monthly active user count declined, this impact was more than offset by higher revenue per user as demand from advertisers remained strong. In addition, the impact of Apple’s iOS changes with focus on data privacy was not significant as advertisers used the firm’s full-funnel tools for broad based and direct response marketing.

We are pleased with the firm’s strategy to continue investing in new features and expanding its reach into new international markets to drive further growth. While these efforts will pressure margins in 2022, we expect profitability to improve in 2023 and beyond as user and content growth from those investments attracts more advertisers. With lower user growth assumptions for this year and the impact of investments on margins, we have lowered our fair value estimate to $60 from $67. We believe this narrow-moat name represents an attractive investment opportunity.

Total fourth-quarter revenue came in at $846.7 million, up 20% from the prior year as average revenue per user increased 23% more than offsetting the 6% decline in monthly active users. Adjusted EBITDA margin of 41% during the quarter was about 100 basis points below last year mainly due to higher R&D headcount and more aggressive marketing. For the third consecutive quarter, the firm reached GAAP profitability due to top line growth exceeding growth in R&D and sales and marketing spending. While we expect the firm to remain profitable, we project lower margins this year with further investments in growth.

As Pinterest laps the positive impact that the pandemic had on its user base in second half of 2020 and the first six months of last year, we expect a return to growth in the platform’s monthly active users this year, after which the positive impact of the firm’s network effect on revenue growth and margin expansion should become more apparent.

Morningstar Premium Members gain exclusive access to our full analyst reports, including fair value estimates, bull and bear breakdowns, and risk analyses. Not a Premium Member? Get this and other reports immediately when you try Morningstar Premium free for 14 days.

Ali Mogharabi does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.