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What Investors Can Expect from Pinterest’s Q2 Earnings

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On Wednesday, Pinterest stock fell 1.3 percent and closed at $25.39. The stock was trading 31.1 percent below its 52-week high of $36.83 and 151.4 percent above its 52-week low of $10.10. At the closing price yesterday, the stock had a market capitalization of $14.9 billion.

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Pinterest’s Q2 earnings expectations

Pinterest will likely report its second-quarter earnings results on July 31. Should you buy the stock before its earnings results?

Analysts expect Pinterest to post revenue of $250.5 million in the second quarter—a reduction of 4.1 percent YoY (year-over-year) from $261.3 million. Also, they expect the company to post an adjusted EPS of -$0.14—down from -$0.06 in the same quarter last year.

Analysts’ recommendations for Pinterest stock

Among the 25 analysts tracking Pinterest stock, nine recommend a buy—down from ten in the last month. Fifteen analysts recommend a hold—up from 14 in the last month. One analyst recommends a sell—unchanged from the last month. Analysts have an average target price of $24.05 on Pinterest. The target price implies a return of -5.3 percent based on the closing price of $25.39 on Wednesday. The consensus target price for the stock has risen from $21.00 in June—a rise of 14.5 percent.

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This week, Lloyd Walmsley of Deutsche Bank increased its target price on Pinterest stock from $27 to $29. The analyst maintained a buy rating on the stock before its second-quarter results. Walmsley thinks that the company will likely post strong revenue growth in the quarter due to higher user engagement.

Heath Terry of Goldman Sachs also increased its target price on Pinterest stock to $26 from $17. Terry maintained the neutral rating on the stock. According to a report from TheFly, “Going into Q2 earnings, Internet sector valuations are well over the previous peak of the last five years and 35% above the average for that period on an equal weighted basis.” The report also said, “While there is considerable justification for this given, including the acceleration in e-commerce growth, digital payment adoption and limited alternatives for growth investors, the bar is clearly high for results season.”

Earlier this month, UBS and MKM Partners raised their target prices for Pinterest stock from $16 to $23 and $18 to $26, respectively. Wedbush also increased its target price on the stock from $26 to $31.

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Peer comparison

In the second quarter, Snap reported revenues of $454.2 million—17.0 percent growth from $388.0 million in the second quarter of 2019. Snap beat analysts’ consensus estimate of $440.8 million. The company’s adjusted EPS of -$0.09 was in-line with analysts’ consensus estimate. However, the company reported a non-GAAP EPS of -$0.06 in the second quarter of 2019. 

Twitter plans to report its second-quarter earnings results on July 23. For the second quarter, analysts expect the company to report revenue of $707.5 million—a 15.9 percent reduction YoY from $841.4 million. Also, they expect the company to post an adjusted EPS of -$0.01 compared to $1.58 in the second quarter of 2019. 

As of Wednesday, Snap and Twitter have average broker target prices of $24.76 and $31.53, respectively. These figures imply returns of 6.7 percent and -14.6 percent, respectively, over the next 12 months.

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Pinterest’s stock returns

Based on the closing price on Wednesday, Pinterest stock was trading 3.1 percent above its 20-day moving average of $24.63. The stock is also trading 14.6 percent above its 50-day moving average of $22.16 and 30.5 percent above its 100-day moving average of $19.45.

Pinterest’s 14-day relative strength index score is 58. The score indicates that the stock is not overbought or oversold. Pinterest’s lower, middle, and upper Bollinger Band levels are $21.33, $24.63, and $27.92, respectively. On Wednesday, the stock closed near its middle Bollinger Band level, which indicates that it is neutral. Pinterest stock was rated as a sell after its first-quarter earnings.

On Wednesday, the Dow Jones Industrial Average rose by 165 points or 0.62 percent. The S&P 500 and the Nasdaq Composite rose 0.57 percent and 0.24 percent, respectively.

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