During its first investor day, Pinterest announced its expectation for accelerated year-over-year revenue growth following a slowdown in 2022 and 2023. The company foresees a compound annual growth rate in the mid to high teens over the next three to five years compared to previous guidance for growth in the high single digits. Revenue growth in 2021 was under 9% and analysts predict around 8% growth in 2022.
The company aims to reach an adjusted margin for earnings before interest, taxes, depreciation, and amortization in the low 30s within the next three to five years, a substantial increase from the 15% margin seen in the second quarter. Pinterest debuted on the New York Stock Exchange in 2019 and experienced significant growth in 2020 and 2021 due to the Covid-19 pandemic. However, the economic downturn in 2022 impacted digital ad companies, including Pinterest. To mitigate the effects, Pinterest has implemented operational efficiencies and reduced headcount.
In an effort to further enhance its business, Pinterest is prioritizing collaborations with retailers to facilitate consumer purchases outside of its social network. The company recently announced a partnership with Amazon for advertising. Initial tests indicate that ads derived from the Amazon deal are more relevant compared to current ads. Pinterest shares experienced a rise of up to 5% following the investor day announcements.
Pinterest’s stock is currently up 9.3% this year, which is trailing behind the Nasdaq’s 31% gain.
Source: CNBC
