Pinterest's Strong Quarter, Sharp Deceleration 'Not A Surprise'

 Pinterest Inc PINS cited a "sharp deceleration" of business beginning in mid-March and this was "not a surprise," according to Baird.

The company sees preliminary first quarter sales of $269-$272 million, higher than the $266.74 million estimate.

The Pinterest Analyst

Colin Sebastian maintains an Outperform rating on Pinterest's stock with a $23 price target.

The Pinterest Thesis

Pinterest's move to withdraw its 2020 guidance is consistent with Baird's prior checks, which pointed to the pullback in advertising spend "clearly" impacting all platforms, Sebastian wrote in a note. Meanwhile, the company is benefiting from an uptick in usage metrics from the work-from-home and stay-at-home realities. Management also highlighted expectations record levels of engagement were achieved in the past two weeks.

Global monthly active users are estimated at 366 million versus a prior 345 million estimate. The analyst said the uptick in users could be attributed to people looking for ideas related to home projects, home cooking, gardening and other activities.

Management didn't offer any outlook in terms of profit and the company hinted it's evaluating planned expenses while prioritizing objectives for its long-term growth profile. This suggests a focus on self-serve, SMB, analytics/measurement, and international monetization.

The company is backed by a "strong" balance sheet, including $1.7 billion in liquidity, zero debt, and another $500 million it can tap from its revolving credit facility.

PINS Price Action

Shares of Pinterest were trading higher by 10% at $16.39.

Related Links:

Pinterest Shares Rise Sharply After Preliminary Q1 Numbers Beat Analyst Projections

Facebook Surveys Users To Help Researchers Identify Coronavirus Clusters