Key points:
- The Pinterest stock price rallied 6.82% on an upgrade from Goldman Sachs.
- The social media company has been growing its user and advertiser base.
- As a result, the company is set to benefit immensely from specific trends.
The Pinterest Inc (NYSE: PINS) stock price rallied 6.82% after Goldman Sachs upgraded its stock rating from Neutral to Buy based on improvements in the number of users on the social media platform.
Eric Sheridan, an analyst at Goldman Sachs, raised his price target on Pinterest from $24 to $31, noting that despite uncertainties in the digital advertising sector, the platform had demonstrated positive user growth in the recent past.
Also read: The 5 Best Growth Stocks To Watch In 2022.
The investment bank said that user growth and engagement statistics at Pinterest had improved over the short term, and it expects the trend to extend into the medium term. Sheridan also said he sees potential for the social media accompany to grow its revenues while maintaining high margins heading into 20223/2024.
Investors agreed with Goldman Sachs’s upbeat assessment of Pinterest as the company’s stock price rallied higher, driven by renewed investor interest in the stock. Pinterest’s shopping and eCommerce features are key reasons for the higher expectations.
Businesses and individuals can now advertise on Pinterest and process sales from the social media platform. The new features announced in October 2021 have been a hit with many businesses and could fuel the company’s future growth.
Sheridan expressed his confidence in Pinterest’s ability to continually monetise a more significant portion of its user base while capturing a growing share of most companies’ ad budgets due to the e-commerce features.
Pinterest has an advantage over other social media platforms. It is positioned as the go-to platform for creatives who can post their work on the platform and sell it via the new eCommerce capabilities. The company will also benefit from more online advertising and social commerce trends.
Pinterest shares have fallen 33% in 2022 but have recently reversed course and headed higher after forming a bottoming pattern in late May to late July, as shown on the chart below. As a result, PINS shares could notch further gains in future.
*This is not investment advice.
Pinterest stock price.
The Pinterest stock price rallied 6.82% to trade at $26.31, rising from Wednesday’s closing price of $24.63.
