According to an analyst, the advertising partnership between Pinterest (PINS), Amazon (AMZN) and PINS (the stock) that was struck earlier this year will benefit PINS's stock.
Mark Kelley, Stifel's analyst, said in a recent note that advertisers were more positive about Pinterest as the company built out an advertising agreement with the ecommerce giant. He added that Pinterest had "plenty" of room to grow outside the U.S.
Kelley increased his target price of PINS to 32. PINS is currently up nearly 2% on the stock exchange today. It's trading at 26.44.
Pinterest will announce its third quarter earnings on October 30.
PINS Stock: Making Moves Under New Leadership
Pinterest, based in San Francisco, offers a digital board to its 465,000,000 users. It makes most of its money from online advertising.
Bill Ready, a former Alphabet (GOOG), commerce executive was appointed chief executive of Pinterest on June 20, 2022. Ready has worked to increase the number of users shopping on Pinterest, partly through advertising partnerships.
Pinterest announced in April that it had entered into a multi-year partnership with Amazon to deliver ads for Amazon's products on Pinterest feeds. Ready wrote in a post on his blog that the deal was in line with Pinterest's goal of making all Pins shoppable.
Kelley, of Stifel, said that advertisers are paying attention in his note.
Kelley wrote: "Our conversations this time indicate that the changes made by the company to its native tech, coupled with the launch of Amazon's partnership, will likely bear fruit when we enter the holiday spending period." To be clear, Pinterest may not be the best platform for brands and agencies to promote their products. However, we think that more brands will look to Pinterest to increase their spending over time.
Amazon Deals: Watching the Rollout
Ready stated on the earnings call of the company in August that they are in an early stage of testing for their ad partnership. It will take several quarters to roll out.
This deal is crucial for Pinterest, as Amazon offers a wider range of advertising. This means that ads can be more closely targeted to topics Pinterest users search for. Amazon's advertising division generated $10.7 billion alone in revenue during the second quarter of this year. Pinterest's revenue is expected to reach $2.8 billion by 2022.
Kelley said that both the comments of the company and the advertising channels checks show that the partnership has already helped Pinterest improve the relevancy of its ads.
The PINS stock could benefit from potential international growth
Kelley believes Pinterest also has room to expand outside of the U.S. In recent quarters the company has expanded the types of ads it offers outside of the U.S., according to the report.
Kelley wrote: "A little under 20% of Pinterest's revenue comes from outside the U.S., Canada and Europe. Yet 80% of its (monthly active user) base is located abroad."
PINS Stock: Ups and Downs Following Investor Meeting
PINS' stock price rose temporarily after the company held an Investor Day in September. The company predicted that revenues would increase into the high teens in the next three-year period. Growth was slower in 2022 and 2023.
The S&P 500 is slightly ahead of the shares, which are up around 7% for the year.
PINS stock hit a 52 week high of 30,86 on 18 July after an upgrade from Evercore ISI to buy. PINS shares fell after a report on second-quarter earnings showed increasing expenses.
According to IBD MarketSmith's pattern recognition, PINS is also currently in a pattern of a double bottom with a purchase point of 28,90.
According to FactSet, analysts anticipate that the company will report an increase in earnings of 91% over the previous year, resulting in an adjusted 21 cents a share. Analysts also expect revenues to rise by 8.7%, or $744 million.