Pinterest Jumps Following Q3 Earnings – a ‘Rare Bright Spot’

Pinterest (NYSE: PINS) shares are up more than 9% premarket Friday after the company reported third-quarter earnings results after the close on Thursday, topping profit and revenue expectations.

The social media company reported adjusted earnings per share of $0.11 on revenue of $685 million, topping analyst expectations of earnings per share of $0.06 on revenue of $666.71 million. The company's Q3 global monthly active users were flat year-over-year at 445 million.

Looking ahead, Pinterest sees fourth-quarter revenue growth in the mid-single digits year-over-year, which takes into account “slightly greater foreign exchange headwinds than in Q3 2022.” Fourth quarter non-GAAP operating expenses are expected to grow in the low double digits quarter-over-quarter.

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Following its earnings release, Stifel analyst Mark Kelley released a note labelling Pinterest's Q3 report “a rare bright spot thus far through earnings season.” The analyst said it highlighted the company's stabilizing user base, positive engagement trends and an outlook for Q4 that was “also slightly ahead of the Street.”

The analyst acknowledged that October is tracking at the low end of the guidance range, which may “cause some to worry a bit,” but believes the back-ended nature of the quarter should advance the business and that the company continues to expect margin improvement in 2023. Kelley maintained a Hold rating and a $22 price target on Pinterest shares.

Elsewhere, Barclays raised the price target on Pinterest to $25 from $23, keeping an Equal Weight rating on the shares. Barclays analyst Ross Sandler said that “amidst the wreckage that has become the digital advertising sector this week,” Pinterest stood out with “best-in-class” revenue growth, improving monthly actives user and engagement, and reiterating the commitment to margin expansion in 2023.