I feel like it has been well known that ad spending would lead to results like this.
Agreed MaddestMax. The headline would be 35% revenue growth, guidance pulled for 2020…but we already knew that: https://investor.pinterestinc.com/press-releases/press-relea…
The other numbers you threw out, even the good shopping content growth and Shopify partnership, are difficult to integrate into the bigger picture. It’s great that certain types of revenue are growing. But others are falling. We’ve seen that be deceptive sometimes, like with Pivotal and Nutanix.
PINS now:
~$18/share (up from ~$11 a couple months ago, down from ~$25 90 days ago)
~$10.5 billion mkt cap (12 billion yesterday, 14 billion 90 days ago)
$1.213 billion in TTM revenue (so PS is ~8.5)
$1.7 billion in cash (and no debt, I believe)
PINS is cheap. Now let’s look at the quarter.
Revenue
Year Q1 Q2 Q3 Q4
2018 131.4 161.2 190.2 273.2
2019 201.9 261.2 279.7 399.9
2020 271.9
US ARPU (Avg Revenue per user)
Year Q1 Q2 Q3 Q4
2018 1.59 1.98 2.33 3.16
2019 2.25 2.80 2.93 4.00
2020 2.66
International ARPU
Year Q1 Q2 Q3 Q4
2018 .05 .05 .06 .09
2019 .08 .11 .13 .21
2020 .13
Non-GAAP Net Inc/Loss
Year Q1 Q2 Q3 Q4
2018 -47.8 -34.2 -14.9 49.5
2019 -40.4 -24.5 6.0 76.9
2020 -59.9
All the numbers moved in the right direction except net loss. The loss was due to sky-high Op Ex, up 69% YoY, but they said We expect to continue to grow operating expenses in Q220 year over year, but at a slower pace compared to Q120. …so perhaps they’ve slowed investments since Covid hit. They have almost 2 billion cash, so they’re not in trouble.
US ARPU would probably have been closer to (maybe over) 3.00, but March really went awry for them. They talked on the call about what sounded like severe downshifts from many advertisers. Some of them have already come back to some extent, and April was only down 8% from a very good April last year…but obviously PINS is not benefiting as much as we might have hoped from the world staying home.
In context, the numbers aren’t terrible. It’s what I learned about the business that puts me off PINS a bit. I hear them talk about their sales trends (more ad bidding, less whatever) and it seems like revenue is shifting rather than meaningfully growing. Maybe that’s not a perfect description, but I do feel like I’ve seen this movie before.
Conclusions
This is a value investment, and for me, those are difficult. That’s why it was my smallest position and why I only meaningfully added after it cratered in March. But I still think PINS is worth more than its current market cap – even more than the 14 billion mkt cap from 90 days ago. But that’s the long term, and it seems to be getting longer, because the short term is completely unclear. I think my money is better off elsewhere. I’ve trimmed a bit, and I will likely trim more or even sell out completely in the near future.
Bear