Pinterest Gains After Strong Q3, Result Seen as a ‘Rare Bright Spot’ By Investing.com

By Senad Karaahmetovic

Pinterest (NYSE:) shares are trading over 9% higher in pre-market Friday after the social media company reported stronger-than-expected results for its third quarter.

Pinterest an adjusted EPS of $0.11 on revenue of $685 million to top the expectations that were looking for an adjusted EPS of $0.06 on sales of $665.5 million.

Pinterest reported 445 monthly active users (MAUs) to beat the 440.1 million consensus. The average revenue per user (ARPU) came in at $1.56, again higher than the $1.53 estimate. The adjusted Ebitda margin was reported at 11%, a significant beat relative to the 6.1% consensus.

For this quarter, Pinterest expects its revenue to grow by mid-single digits. The company also sees adjusted operating expenses growing 35% year-over-year. On a more negative note, the management said on the earnings call that October is tracking to the low end of the guidance range provided, although it expects an improvement later in the quarter.

Morgan Stanley analysts said the results represent a solid initial improvement. They believe investors will continue to focus on the execution into 2023.

“3Q results were stronger than expected and management demonstrated early execution towards key initiatives. The turnaround will take time though, and a weaker 4Q guide combined with (potentially) rising consumer weakness into ’23 create uncertainty and cause us to lower ests,” the analysts said.

Stifel analysts said Pinterest’s results are a “rare bright spot thus far through earnings season,” thanks to the stabilizing user base and positive engagement trends.

“We’re encouraged by these recent trends but feel it’s appropriate to stay on the sidelines as we weigh what appears to be near-certain margin improvement story relative to an environment where ad budgets are increasingly under the microscope.”