Core Viewpoint - Pinterest has experienced a 10% decline in stock price following quarterly earnings that fell short of expectations, yet the stock is considered a worthwhile investment at approximately $35 due to reasonable valuation and strong operational performance [2][3][8] Financial Performance - Pinterest's revenues have shown significant growth, with a 17% increase to $998 million in the latest quarter compared to $854 million a year prior, outperforming the S&P 500's 4.3% rise [6] - The company has achieved an average growth rate of 12% in its top line over the past three years, compared to 5.2% for the S&P 500 [6] - Operating income over the past four quarters was $216 million, reflecting a modest operating margin of 5.5%, while operating cash flow was $1.1 billion with a high cash flow margin of 27.5% [12] - Net income for the last four quarters was $1.9 billion, demonstrating a notably high net income margin of 49.3% [12] Valuation Metrics - Pinterest has a price-to-sales (P/S) ratio of 6.8, compared to 3.0 for the S&P 500, and a price-to-earnings (P/E) ratio of 13 against the benchmark's 22.6 [6] - The company's price-to-free cash flow (P/FCF) ratio stands at 24, while the S&P 500 is at 20.6 [6] - The current valuation of 6.8 times trailing revenues is consistent with its four-year average P/S ratio of 7.3, indicating potential for further appreciation [8] User Growth and Market Position - Pinterest's global monthly active users have increased by 11% year-over-year to an all-time high of 578 million, driven by AI-driven personalization and strategic partnerships [9] - The strong user growth could warrant a higher valuation multiple for the stock as the trend progresses [9] Financial Stability - Pinterest's balance sheet is robust, with a debt amount of $137 million and a market capitalization of $24 billion, resulting in a favorable debt-to-equity ratio of 0.6% compared to 24.1% for the S&P 500 [12] - Cash and cash equivalents constitute $2.7 billion out of $5.4 billion in total assets, leading to a strong cash-to-assets ratio of 49.2% compared to 6.7% for the S&P 500 [12] Downturn Resilience - PINS stock has performed poorly compared to the S&P 500 during recent downturns, indicating weak resilience in economic downturns [7][13] - The stock has dropped 80.7% from its peak of $89.15 in February 2021 to $17.19 in June 2022, while the S&P 500 experienced a peak-to-trough decline of 25.4% [13]