Pinterest, Inc. (Ticker Symbol: PINS) reported weaker than expected earnings and revenue that sent the stock gapping lower. The American social media web and mobile application company reported an earnings per share beat of .01 cent per share vs. Wall Street analysts’ estimates of a loss of .04 cents per share. However, Pinterest reported a slight revenue miss of $279.7 vs. the $280.6 million that Wall Street analysts were expecting.
The company reported an increase in its monthly active users and Pinterest now has 322 million users, which is more than the 311.8 million monthly active users that were forecasted by the street. The average revenue per user reported was .90 cents, which was slightly lower than Wall Street analysts’ expectations of .91 cents per user.
Pinterest also gave its shareholders updated revenue guidance for the year. The company now is forecasting full-year revenues to come in between $1.1 billion and $1.15 billion, which was slightly lower than the $1.2 billion that Wall Street analysts’ were expecting.
The above image is a chart of Pinterest’s stock since its initial public offering on April 18th, 2019. On its first day of trade, the stock opened at $23.75 and closed out its first seven days of trading on a positive note. Pinterest soon lost its luster and began trading lower over the course of the next month and a half. The stock found some support around the $24.00 price level, which held the opening day low trade price of $23.55, which traders often view as a bullish or positive sign for the stock. Pinterest proceeded to break above its downtrend, led by a positive earnings gap in the third quarter, that sent the stock trading to new highs but failing to truly breakout above its all-time high.
The stock found some price resistance right above the $36.00 price level while forming a bearish divergence, where the stock makes a higher high in price but the RSI makes a lower high. Traders often use this pattern to determine when a trend may be coming to an end, as occurred in Pinterest’s case. The stock continued to sell off finding dynamic support briefly at its 50-day moving average in September. The stock gapped lower on the earnings news and is currently trading only 6% away from its all-time low of $18.71.
Traders who are bullish on Pinterest should watch for a move above $21.28 into its earnings day gap, for a possible run to test the 50-day moving average around the $26.00 price level.
Traders who are bearish on Pinterest should watch for a potential move back below its earnings day low around $18.71, for a possible move lower into a new all-time low territory, where some longs will be exiting the market.
(Chart above courtesy of www.tipranks.com)
Based on a survey of 17 analysts offering 12-month price targets, the average price target for Pinterest’s stock is $28.38. According to that number, the stock is priced at a discount relative to Wall Street’s analysts and could be considered undervalued around current levels near $20.17.
Investors in the social media space should look to competitor Facebook’s (Ticker Symbol: FBWealth Strength IndexAAPL is Extremely Up and trending Up) next earnings release on Jan 31st, 2020 for fresh news within the social media sector.