Pinterest Down 14.7% in a Year: Should You Avoid the Stock?

Core Insights - Pinterest, Inc. (PINS) shares have declined 14.7% over the past year, underperforming the Internet - Software sector's growth of 4.5% and the S&P 500 [1] - The company has outperformed Snap Inc. (SNAP), whose shares fell 35.3%, but underperformed Meta Platforms, Inc. (META), which saw a 7.8% increase [2] Financial Performance - In Q3, total costs and expenses rose to $990.6 million from $904.3 million year-over-year, with research and development expenses increasing to $371.3 million from $326.7 million [5] - Earnings estimates for PINS have declined by 10% for 2025 to $1.62 and by 10.48% for 2026 to $1.88 over the past 60 days [10] Competitive Landscape - Pinterest faces significant competition from social media platforms like META, Reddit, and SNAP, with Instagram being a primary competitor due to its strong e-commerce integration [3] - Smaller companies such as Allrecipes, Houzz, and Tastemade also pose competition by offering engaging content and commerce opportunities [3] Operating Challenges - The company is experiencing rising operating expenses due to heavy investments in AI product development and user engagement initiatives [4] - Global ad pricing has dropped 24% year-over-year, impacting overall ad revenue and monetization, particularly in newer international markets [7][9] Market Conditions - Macroeconomic challenges, including tariff-related uncertainties and consumer spending cycles, are affecting ad spending and net sales growth in the U.S. and Canada [8] - The reliance on retail and shopping ads is a concern, as several large U.S. retailers are facing margin pressures [15] Valuation Metrics - From a valuation perspective, Pinterest appears relatively cheaper compared to the industry, with a price/sales ratio of 3.83, lower than the industry average of 4.94 and the stock's mean of 5.04 [11]