Ranking Pinterest (PINS) On My Checklist

Hey Fools,

Here’s my attempt to rank PINS

**Metric (score potential)                                            PINS** 

Financial Resilience:(0 - 5)                                        5
Gross Margin: (<50%, 50% to 80%, >80%) (0 - 3)                      2 
Returns On Capital: (Low, Average, Rising)(0 - 3)                   1  (low but rising fast) 
FCF: (Negative / Positive / Positive and growing fast) (0 - 3)      3  
EPS: (Negative / Positive / Positive and growing fast) (0 - 3)      3 
Network effect (None / Weak / Strong) (0 - 15)                      5 (weak, but some)
Switching costs (None / Weak / Strong) (0 - 15)                     
Durable Cost Advantage:(0 - 15)                                     
Intangibles: (0 - 15)                                               10 (brand)
Moat Direction: (Narrowing / Stable / Widening) (0 - 5)             5 (business momentum) 

Optionality:(0 - 7)                                                 4 (I don't see much beyond its core offering)
Organic Growth Runway: (G.D.P. / 2x or 3x G.D.P. / 15%+) (0 - 4)    4  
Top dog And/Or Industry Disruptor:(0 - 3)                           3 (visual search) 
Operating Leverage Ahead?(0 - 4)                                    4 

Acquisition:(0 - 5)                                                 2 (expensive to onboard)
Dependence: (0 - 5)                                                 5 

**Company-specific factors:**
Recurring Revenue: (None / Some / Tons) (0 - 5)                     5 
Pricing Power: (None / Inflation / Tons) (0 - 5)                    5 
**Management & Culture:**
Soul in the game: (Founder/Family Run/Long Tenured CEO) (0 - 4)     4 
Inside ownership: (None / Modest / Very High) (0 - 3)               2 
Glassdoor ratings: (0 - 4)                                          3  
Mission statement? (Simple, Inspirational, Optional-able) (0 - 3)   3

Performance Vs. S&P 500:(0 - 4)                                     1 (partial credit for day 1 pop)  
Shareholder Friendly Actions:(0 - 3)                                0  
Consistently Beats Expectations?(0 - 4)                             0 (not enough data)

**Pre Gauntlet Score: 83 (excellent)** 

**The Gauntlet**
Customer Concentration:(-5 , -3, 0)                                 0 
Industry Disruption:(-5, -3, 0)                                     0 
Outside Forces:(-5, -3, 0)                                          0 
Big Market Loser: (-5, -3, 0)                                       0
Binary Event: (-5, 0)                                               0  
Extreme Dilution: (-4, -2, 0)                                       0 (not enough data) 
Growth By Acquisition: (-4, -2, 0)                                  0 
Complicated Financials (-3, 0)                                      0 
Antitrust Concerns: (-3, 0)                                         0
Political Risk: (-3, -2, 0)                                         0
Currency Risk:(-2, -1, 0)                                            

**Final score: 79 (great)**

For perspective, the highest score possible is 100, and the lowest score possible is -44.

Pinterest’s 79 is great. This number could go even higher if the company regularly beats
expectations and thumps the S&P over time.

Pinterest’s stock is expensive, and it came public at a FLAT valuation to what it achieved a few years ago in the public market. That’s something to watch.

Still, there’s no doubt in my mind that this is a high-quality business.



Is there a spreadsheet that has all of your data? Yes, but I do not want to make it publicly available. I will post on a company by company basis to the boards. Feel free to follow me if you want to see my most recent rankings.

**What companies have received the highest scores so far?**Alphabet (88), Paycom Software (86), MercadoLibre (85), Amazon (85), HubSpot (85), Adobe (84), Paylocity (84), and Q2 Holdings (84)

What data do you have to show that this methodology works? Very little. I’m currently thinking through ways to measure its long-term effectiveness, but my gut feeling tells me that it will help me pick better stocks.

What about valuation? This data is only designed to help me determine business quality, which is far more important than valuation. Whenever I personally make buy/hold/sell decisions, I always consider valuation too, but I think it is small “f” foolish to not buy a truly great business just because of valuation concerns.

You can read more about the checklist here: http://discussion.fool.com/brian39s-quality-checklist-version-20…


This is a company no one would miss if it disappeared.

While I’m glad to see you tweaking your ratings, there’s something amiss when cos like this appear attractive.

wordlessly watching, he waits by the window and wonders…


This is a company no one would miss if it disappeared.

I highly disagree.

This is one of my wife’s favorite companies, period.

She regularly uses the site for inspiration. Just recently she used it to pick out the look of our kitchen facelift. Her sister sent her a recipe on salmon cooking using the site. She regularly gets gift ideas from browsing around.

There is an argument to be made that my rankings could need tweaking, but I happen to think this is a very attractive business.



This is a company no one would miss if it disappeared

Strongly disagree. Pinterest provides a unique service that cannot be replicated (at the moment). If it disappeared, millions of its users would miss it, including me. I believe the stat being thrown around is 85% of women aged 25 - 54 use Pinterest (by the way I am a man). The study was commissioned by Pinterest but the number is relevant. Please see the link below for a marketing take on Pinterest. One highlight in particular “Pinterest users are twice as likely to say their time on the platform is well spent”.

I recently purchased a home with my fiancee. Every single decision we made regarding home furnishing, home decorating, and landscaping involved Pinterest. The entire process basically relied on Pinterest, other than for making purchases (which may provide some optionality that Brian suggested was lacking).

It may seem like Pinterest is disposable, but I think you have to ask whether it is disposable to YOU, or disposable to its 250 million MAUs.



This is simply my opinion, but pinterest is just about one of the most annoying things to hit the internet in a long time. Google image search gets totally messed up by pinterest results, where finding the information you want turns into a rabbit hole to a pinterest image, then perhaps down to another pinterest post, and then almost never to the actual information I wanted.

I have started excluding it from my search, and I know it’s extremely common for people to recommend removing it to get better results. For home renovation ideas, a pinterest excluded search it always better in my experience and sites like houzz are much better at getting what you want with less words.

I may lose out on potential profits, but I’ll never invest in this stock. I can’t understand why people like it. :slight_smile:


Agreed. We use Pinterest all the time at work for ideas.

Whatever we may be looking for, it has it and then helps you find it for sale, or even many times better ideas and alternatives.

Fantastic website. Incredibly useful for anyone looking for just about anything visual.


This is a company no one would miss if it disappeared.
@RGB - I couldn’t disagree more

I think this is a company that created a whole new social media paradigm, that is non-threatening. Some interesting info here: No. of Recommendations: 6

Hubspot, which is another really great company that I use but haven’t invested in, has some info about it here: https://blog.hootsuite.com/pinterest-statistics-for-business…

So my startup (which caters to teachers) has had better results interacting with Pinterest than with Facebook. We haven’t advertised on Pinterest though - obviously we should and will start.

From the point of view of the company and the platform, I think it is great, and really disagree with RGB.

From the point of view of investing, I’m not ready… yet. It seems expensive, the growth doesn’t thrill me. I do think the moat is underappreciated, however. People put their work into creating pins. They are not going to leave, and they are going to tell their friends.


Another anecdote. My girlfriend has a growing blog with pretty solid traffic. >90% of her traffic comes from Pinterest and she spends a significant amount of time creating and posting pins. Pinterest is huge in the blogging community and in that community, until a better source of traffic comes along, I can’t imagine them all picking up and leaving.


Pinterest is an example of the greatness of social media.

Likeminded people sharing ideas openly and continuously building up its resources as a community.

No politics, no fake news stories, no annoying friend posting 20 photos of their kids doing cute things.

I’m hoping for a sell off over the next months as a lock up of shares happens and the honeymoon period wears off. Then I would buy shares of the company.