What Happened?
Shares of social commerce platform Pinterest (NYSE: PINS) jumped 3.2% in the morning session after an upgrade from analysts at Morgan Stanley, who boosted their rating on the stock to "Overweight" from "Equal Weight."
The investment bank also raised its price target on the visual discovery engine's shares to $45 from $37, suggesting a potential upside of about 21% from its previous close. Morgan Stanley's increased optimism is based on the belief that Pinterest's investments in technology, particularly GPU-enabled innovations, are starting to pay off. Analysts at the firm noted that checks within the advertising industry show improved ad efficiency, relevancy, and performance-driven growth on the platform. This has led them to forecast revenue growth of 17-18% for Pinterest in the second half of 2025, which is about 4% above the general consensus on Wall Street. An "Overweight" rating generally means an analyst believes the company's stock will perform better than others in its sector.
After the initial pop the shares cooled down to $37.87, up 2% from previous close.
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What Is The Market Telling Us
Pinterest’s shares are quite volatile and have had 17 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 5 months ago when the stock gained 26% on the news that the company reported fourth-quarter results, which beat analysts' revenue and EBITDA expectations. Its quarterly guidance for both metrics outperformed Wall Street's estimates. The growth was driven by a record-high 553 million global monthly active users (MAUs), up 11%, and a 6% increase in global average revenue per user (ARPU).
Overall, we think this was a good quarter with some key metrics above expectations. Following the impressive performance, Bernstein upgraded the stock from Hold to Buy, adding, "It's possible that this quarter was a one-off, though we see enough evidence in execution to believe the pace of progress is sustainable."
Pinterest is up 23.8% since the beginning of the year, and at $37.87 per share, it is trading close to its 52-week high of $41.10 from July 2024. Investors who bought $1,000 worth of Pinterest’s shares 5 years ago would now be looking at an investment worth $1,472.
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