Wednesday, April 12, 2023

Why This Misunderstood Moneymaker Makes a Great Long-Term Bet

By Megan Brantley

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You've been hearing a lot about quick-hit earnings trades over the last few weeks – but even we investors need to maintain a balanced diet of short-term trades and long-term bets to sustain a healthy (aka profitable) lifestyle.

So while we binge on fast-cash trades over the next 10 weeks of earnings season, there's also a stock you can savor for the long haul.

Even though it's often lumped into the social media stock category, what this company provides is more like the ultimate vision board, allowing users to curate new recipes, fashion trends, wedding ideas, crafting inspiration, home design, organizational tools... pretty much anything you can think of.

It's also an advertiser's dream because of how well it connects a company's ad with a potential customer, boasting a 2.3x more effective cost-per-conversion than ads on other social media sites.

Its effectiveness became particularly evident in the third quarter of 2022 when this company was increasing its revenue while traditional social media giants, Facebook (META) and Snapchat (SNAP), were seeing a decline in revenue.

And that's just one of many reasons we're betting on this stock for the long haul...

Click here to keep reading this story (free) on derbycityinsights.com

Reason No. 1: A Site Where Users Actually WANT to See Ads

If you ask folks their primary reason for using the Facebook app, a recent survey says most do it to keep up with friends and family.

When they use Snapchat, it's typically to publish an update or share a photo with their followers.

But when they go to use Pinterest (PINS), most say they're specifically looking for brand-related content.

A stunning 85% of its weekly U.S. pinners have made a purchase from a pin they saw from a brand. And that's music to an advertiser's ears.

In fact, between 2020 and 2022, even though Pinterest's average annual userbase grew by a moderate 4% as usage tapered off from its pandemic-era boom, the company was able to grow its annual revenue by 65%:

Remodeling your kitchen? Head to Pinterest to get inspired, build your vision board, and buy what you need without ever leaving the app – no popups or 30-second forced video ads needed (looking at you, YouTube).

Reason No. 2: Invaluable Consumer Data

Since consumers come to Pinterest to generate ideas, the site can leverage search data to gain insight into what's coming in pop culture before it starts trending. (A company after our own heart.) In the last three years, 80% of predicted trends came true.

The recently released Pinterest Predicts 2023 report includes emerging trends such as airy fashion styles, "hipstoric" homes, pool parties for dogs, and "primal movement" anti-tech workouts. Needless to say, we'll be watching those trends, too.

Reason No. 3: A New CEO Straight from Google's Bench

Former Google executive Bill Ready joined Pinterest as CEO in June 2022 and immediately got to work on increasing the amount of "shoppable" inventory, aka products that users can buy directly from the website.

The end goal is to create more commerce to capture a greater share of ad budgets, and the company teamed up with Shopify and other third-party platforms to advance this agenda.

Reason No. 4: Profits Powered by AI

Oh, and did you realize that Pinterest is actually an artificial intelligence (AI) opportunity, too?

Last year, it acquired AI-powered shopping platform THE YES, which lets users shop a personalized feed based on their input on brand, style, and size.

Now, anytime users interact with Pinterest, the app collects more and more data. And its recommendations – and the ads it pushes out – get smarter and smarter.

And the user experience? It just gets better and better.

Folks are raving about AI. It's one of the fastest-growing consumer trends in the LikeFolio database, with mentions driving 385% higher year-over-year:

Reason No. 5: A Long-Term Winner in the Making

After Wall Street all but left this social media stock for dead – shares started the year at just $23.16, which was down more than 70% from their 2021 highs – it looks like we're in the early stages of a comeback.

With a fresh CEO, and a renewed vision to make Pinterest "the home of taste-driven shopping," PINS has gained back some of its value, trading just below $30 as of this writing.

Most recently, the company garnered praise for its new partnership with LiveRamp, which helps Pinterest's advertising clients better understand what is and isn't working so they can better target consumers through the platform.

It's a move that should make Pinterest even more popular with advertisers.

LikeFolio data shows consumers talking about buying products from a brand they discovered on Pinterest looking strong this Spring, on pace to best last year's mark by 31%: