Buy, Sell, Or Hold PINS Stock At $40?

Core Insights - Pinterest reported Q4 revenue of $1.15 billion, slightly above consensus estimates of $1.14 billion, but earnings per share of $0.56 missed the expected $0.64 [1][2] - The stock surged 19% following the earnings report due to strong user growth and an optimistic outlook, despite underperforming the S&P 500 year-to-date [1][4] - The company experienced an 18% year-over-year revenue growth, with a notable increase in monthly active users (MAUs) by 11% to 553 million and average revenue per user (ARPU) rising 6% to $2.12 [2] Financial Performance - Pinterest's adjusted EBITDA margin expanded by 300 basis points to 41% in Q4, indicating improved profitability [2] - The company guided for Q1 sales of $845 million and adjusted EBITDA of $163 million, surpassing consensus estimates of $834 million and $139 million, respectively [3] Stock Performance and Valuation - Despite a mixed Q4 performance, Pinterest's stock has shown upward momentum, driven by strong user engagement and a positive outlook [4] - The stock is currently trading at 7.7 times trailing revenues, slightly above its historical average price-to-sales ratio of 7.3 [6] - There is potential for further upside in Pinterest's stock, supported by robust user growth, increasing ARPU, and margin expansion, justifying a premium to its historical valuation [6]