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Tuesday, October 31

Pinterest Gains Ground With User Growth

B-tier social media is showing a lot of strength

After months of volatility, Pinterest has logged enough user and revenue growth to finally start breaking out. The team at Pinterest is turning a corner as they really start cementing their new identity as a platform.

In last night's earnings call, Pinterest generated an EPS beat of $0.28 generated from $763 million in revenue. Pinterest has managed to develop their own efficiency model despite their lack of scale. Mild cost-cutting measures and a new focus as a visual search and shopping platform are helping Pinterest generate a lot of momentum. 

More importantly, Pinterest is generating real user growth again, hitting an 8% increase YoY for monthly active users. As Pinterest refines their advertising model, they've achieved solid growth to $1.61 revenue per user. Basically, all of Pinterest's pieces are finally coming together in a way that the market is ready to believe in their model again. Costs are down, revenue is up and more users are coming to the platform and generating more revenue. 

There's been some concern that the only way to generate real growth in social media at this moment was to be at the scale of Meta, TikTok, or YouTube. Pinterest today and Snap last week have shown that you can pull off an efficiency model even when you're in the B-tier of social media. More importantly, after Snap and Meta pumped some fear into the market by stating that the ongoing Israel-Hamas war had softened advertising demand, Pinterest management came out and said that advertisers were beginning to increase spend again, signaling that weak demand could be short-lived. Pinterest stock popped double digits in premarket trading. 

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