$PINS (Pinterest Inc) is the well-known image-sharing social media website that allows users to collect links and create virtual pinboards based on their interests.

𝗔𝘃𝗲𝗿𝗮𝗴𝗲 𝗥𝗲𝘃𝗲𝗻𝘂𝗲 𝗣𝗲𝗿 𝗨𝘀𝗲𝗿
As a Social platform, 𝗮𝘃𝗲𝗿𝗮𝗴𝗲 𝗿𝗲𝘃𝗲𝗻𝘂𝗲 𝗽𝗲𝗿 𝘂𝘀𝗲𝗿 (ARPU) is one of the most important metrics investors look at, and it keeps rising.

During 20Q3 the company kept demonstrating growth in revenue and active users, special remark outside the U.S.
As we can see from the image below, the company reported

𝗜𝗻𝘁𝗲𝗿𝗻𝗮𝘁𝗶𝗼𝗻𝗮𝗹 𝗘𝘅𝗽𝗮𝗻𝘀𝗶𝗼𝗻
There is a massive difference in the US $3.85 vs International $9,21 ARPU, this happens because the company isn’t yet active everywhere the users are pinning. The company has been focusing on expanding to other countries, 7 at the end of 2018, 28 at the end of 2019, first focusing on English-speaking countries, and is yet to expand to India and China, historically very strong countries for other tech companies.

𝗡𝗼𝘁 𝗱𝗶𝘃𝗲𝗿𝘀𝗶𝗳𝗶𝗲𝗱 𝗲𝗻𝗼𝘂𝗴𝗵, 𝘆𝗲𝘁
The platform tends to attract predominantly young millennial female users, in 2019, ~80% of the platform’s users were women.
If the company wants to keep its growth – or further improve it – it needs to add more diverse content or somehow focus on attracting more man and older audiences.

𝗪𝗶𝗻-𝗪𝗶𝗻 𝗣𝗶𝗻𝘁𝗲𝗿𝗲𝘀𝘁 𝗺𝗲𝗲𝘁𝘀 𝗦𝗵𝗼𝗽𝗶𝗳𝘆
In May, both companies announced a partnership, allowing over 1M Shopify merchants to convert their catalogs into shoppable pins.
This is an excellent partnership, as all Pinterest users are now exposed to Shopify Product Pins, and on the other side, Pinterest was added as a new Shopify Marketing channel.
Shopify’s goal is to help the Pinterest community find the products and companies that inspire them, given these tend to conduct unbranded searches, and at the same time allow merchants to reach more shoppers, helping customers discover brands they love.

𝗔𝗜
Pinterest Engineering Blog can provide outsiders a glimpse of what is going on inside the company. We can see a lot of content regarding search engine optimizations, AB testing, employee onboarding, AI machine learning, very important for its recommendations algorithms.
As a tech company, its intellectual property is the most important asset, and all decisions seem to be made around it.

𝗖𝗮𝗿𝗲𝗳𝘂𝗹: 𝗣𝗿𝗶𝗰𝗲 𝘁𝗼 𝗦𝗮𝗹𝗲 𝗥𝗮𝘁𝗶𝗼
Since we still have no profits, we can’t yet use P/E ratio, we must use the Price to Sales ratio, and it is around 30, taking into account trailing twelve months. This value suggests the current share price is priced for strong growth, that the company seems to be delivered.

𝗔𝗱𝘀 𝗮𝗿𝗲 𝗸𝗶𝗻𝗴, 𝘄𝗶𝘁𝗵 𝗺𝗼𝗱𝗲𝗿𝗮𝘁𝗶𝗼𝗻
Like social media, there is a sweet spot for the number of ads the company can display.
Want more profits? Add more ads, BUT, use too many, and no one will visit the website.

𝗜𝗻𝘁𝗲𝗿𝗲𝘀𝘁𝗶𝗻𝗴 𝗳𝗮𝗰𝘁𝘀, 𝘄𝗼𝗿𝗱𝘀 𝗳𝗿𝗼𝗺 𝗖𝗘𝗢 𝗕𝗲𝗻 𝗦𝗶𝗹𝗯𝗲𝗿𝗺𝗮𝗻𝗻
According to Founder and CEO Ben Silbermann, the idea is not to be social.
“Pinterest is at its most basic level, about you.
Find online your inspirations, hobbies, the things you wanna do in your life and bring them offline.
It is NOT about following the news, getting followers, or following celebrities.
The goal is for you to find things that can inspire you to do things in your life, rather than being interacting with other people all the time.”
Check the YouTube Video Pinterest CEO: Our goal is to get you offline

𝗙𝗶𝗻𝗮𝗹 𝘁𝗵𝗼𝘂𝗴𝗵𝘁𝘀
The company has grown a lot during this year, it does have growth priced in, but the opportunity is gigantic.
I really do like the company and the CEO, I like how different they are from the typical social media platform, and their honest mission.
I am worried about the still low ARPU, but this can be fixed with expansion to other countries and more content for different demographics.
We hold PINS in our portfolio, as we do like the company and we will be monitoring expansion and initiatives taken by the company to increase ARPU.

𝗔𝗻𝗱 𝘆𝗼𝘂?
What do you think about the company?
Leave a comment below!

Cheers,
Alex

Original eToro post