Pinterest was introduced to the public less than a year ago. Like most IPOs, the stock has been volatile while the public figures out whether the company is a keeper.
Pinterest Is A Keeper
If Google killed the library, Pinterest is killing the magazine. It’s a place for planning - weddings, dinner parties, outfits, kitchen remodels, office parks, you name it.
The company has turned a high value destination for people into a high performing place for advertisers. Many digital advertisers are calling out Pinterest as the most important new platform to watch.
How Fast Is It Growing?
We use two metrics to understand growth: Monthly Active Users and Gross Profit per Person. For example, Apple has an installed base of 1.5B that grew 8% in 2019, and generated $67.72 of gross profit per person, down -4%:
Pinterest is rapidly growing both the number of people on its platform and the profit per person. The company still has a long way to go to match the giants. For a complete database of profit per person metrics across 50+ companies, email us at email@example.com.
How To Value Their Growth
Revenue is a bad metric for evaluating the success of new businesses. So instead, we use Margin = Gross Profit - Marketing to filter out revenue that’s brought in from excessive discounting or marketing spend. Here’s how a few recent IPOs stack up:
Pinterest is again in a rare position. The company is generating a lot of margin, while still available at a valuation supported by its 40%+ growth rate. For a complete database of Market Cap / Margin metrics across 50+ companies, email us at firstname.lastname@example.org.
At Upholdings, we began buying Pinterest shares below $20, and believe that current market pricing still offers a double-digit return to investors with a long term approach (3+ years).
Upholdings is built for the next generation of investors. We manage a concentrated portfolio of the best public and private growth companies and transparently share our research along the way.
Credits: Public Filings, SimilarWeb, SensorTower, valuation comparison updated from original analysis