Key Takeaways:
- The 2-Minute Valuation Model values Pinterest stock at $45 per share in 2 years.
- That’s a potential 32% upside from today’s price of $34 per share.
- PINS stock is projected to grow EPS by over 100% in the next 3 years.
- Get accurate financial data on over 100,000 global stocks for free on TIKR >>>
Pinterest (PINS) delivered another strong quarter with 570 million monthly active users and $855 million in revenue in Q1, demonstrating the power of its visual search platform and AI-driven shopping experience.
The social media player has transformed from a declining platform into a secular share-taker, with 85% of users coming directly to the mobile app.
With PINS stock now trading at around $34 per share, Pinterest presents a compelling opportunity for investors seeking exposure to the intersection of visual search, AI innovation, and the massive shift toward social commerce.
Let’s examine why Pinterest looks attractive using our 2-Minute Valuation Model.
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What is the 2-Minute Valuation Model?
Three core factors drive a stock’s long-term value:
- Revenue Growth: How big the business becomes.
- Margins: How much the business earns in profit.
- Multiple: How much investors are willing to pay for a business’s earnings.
Our 2-Minute Valuation Model uses a simple formula to value stocks:
Expected Normalized EPS * Forward P/E ratio = Expected Share Price
Revenue growth and margins drive a company’s long-term normalized earnings-per-share (EPS), and investors can use a stock’s long-term average P/E multiple to get an idea of how the market values a company.
Why Pinterest Stock Looks Undervalued
Forecast
Based on analyst estimates, Pinterest is expected to achieve solid earnings-per-share growth over the next three years.
EPS is projected to grow from $1.29 in 2024 to $2.59 by 2027, representing a 101% total increase.
This earnings growth for PINS stock is likely to be driven by:
- Visual Search Leadership: Its proprietary AI model is 30% more effective at identifying relevant content than leading off-the-shelf models.
- Performance+ Suite Success: Automated campaign tools outperform traditional campaigns in 80% of A/B tests while cutting creation time in half.
- International Expansion: Shopping ad revenue is growing 3 times faster than overall revenue in the Europe and Rest of World regions.
- Gen Z Dominance: Largest and fastest-growing user cohort with high commercial intent and visual-first shopping behavior.
For our valuation, we estimate that PINS stock will reach $2.50 in EPS by 2027.
Check out Pinterest’s full analyst estimates and growth forecast (It’s free) >>>
Is Pinterest Stock Undervalued Right Now?
Pinterest stock trades at around 18x forward earnings, which is below its 12-month historical average P/E of 20x, as shown in the valuation chart.
Given the company’s leadership in visual search, expanding international presence, and proven ability to drive advertiser ROI through AI-powered tools, a forward P/E multiple of 18x appears reasonable for our conservative valuation.
Fair Value of Pinterest Stock
Using our 2-Minute Valuation Model and applying a conservative approach:
- Conservative 2027 EPS estimate: $2.50
- Conservative forward P/E multiple: 18x
Expected Normalized EPS ($2.50) * Forward P/E ratio (18x) = Expected Share Price ($45)
The 2-year expected Pinterest stock price we would get from this valuation is $45 per share.
With PINS stock currently trading at around $34 per share, this implies a potential upside of 32% over the next two years or a 15% annualized return.
Pinterest stock is well-positioned to deliver outsized gains to shareholders, given that the broader markets’ average annual returns have been around 10%.
Remember, this is just a valuation exercise, and we don’t know for sure what the stock’s price will be in the future.
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What is PINS Stock Average Analyst Price Target?
Analysts are increasingly optimistic about Pinterest’s growth prospects. The consensus target price is approximately $40.4 per share, indicating analysts see about 19% upside from current levels.
Risks to Consider
Despite the bullish outlook, investors should be aware of several risks that could impact Pinterest’s growth trajectory:
- Macro Sensitivity: Advertising spending tends to decline during economic downturns, which can impact brand awareness campaigns.
- Competition: Large tech platforms continue investing heavily in visual search and social commerce capabilities.
- International Execution: Monetizing international users requires the successful adaptation of tools and measurement capabilities.
- Platform Dependency: Heavy reliance on mobile app engagement and algorithm changes could impact user behavior.
TIKR Takeaway
Pinterest presents a unique investment opportunity in the rapidly evolving visual commerce landscape.
The potential upside for PINS stock is driven by revolutionary visual search technology, proven performance marketing tools, massive international expansion opportunities, and a leadership position in Gen Z’s preferred shopping behavior.
While macro headwinds exist, Pinterest’s transformation from an inspiration platform to a shopping destination is creating durable competitive advantages.
Its ability to deliver measurable ROI for advertisers while providing unmatched visual discovery for users positions it well for long-term growth.
Management’s focus on profitable growth, disciplined expense management, and continued AI innovation provides confidence in Pinterest’s ability to capitalize on the massive shift toward visual-first commerce.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
