Monthly active users ('MAUs') grew only 1% year-over-year and declined sequentially. That removed any potential M&A induced price floor, as analysts focused on this concerning metric. First, rumors had surfaced that PayPal ( PYPL) seeked to acquire PINS, but then PYPL backed out. Sure, that 43% mark represented steep sequential deceleration in growth rates, but PINS wasn't trading at obviously egregious valuations prior to the fall. If you were to only look at the 43% revenue growth rate, you might not think that the stock should have dropped so much. While the decline is understandable, the stock now presents a potential buying opportunity. The stock now trades at less than half of all time highs. Like much of tech, PINS closed out 2021 with a return to gravity. I rate the stock a buy with up to 50% upside over the coming 12 months. Wall Street is not giving enough credit to the strong balance sheet and cash flow generation. PINS has underperformed peers in sustaining user growth, but the current stock price has priced this in.
Unlike other social networking stocks which have remained hot, Pinterest ( NYSE: PINS) has undergone its own stock price crash as the stock has more than halved in a matter of months.
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