Investment Case Update: October 7, 2026
Price: $20.31 (10/7/26)
Market Capitalization: $11.6B
Enterprise Value: $11.5B
What the Company Does
Pinterest is a social media platform of purchase intent, targeting 640 million monthly active users (MAUs) with ads. Users browse content (aka “Pins”) to curate products and bring their ideas to life in women’s fashion, home décor, and food & drinks, with emerging use cases in men’s fashion, auto, and travel. Unlike other social media platforms, targeted ads on Pinterest represent highly relevant product ideas that blend in with content the underlying user is actually seeking (e.g. new outfit). Therefore, Pinterest showing more ads to a user can actually lead to increasing engagement levels, creating a positive feedback loop that benefits users and advertisers. The Performance+ product allows digital advertisers to automate and optimize spending across their digital marketing campaigns on the platform.
Why We Own It
PINS is a differentiated social media platform with a massive runway for growth, as it looks to grow its <1% market share of the fast-growing $750B global digital advertising market through highly achievable growth levers of 1) improving user monetization, 2) a growing and increasingly engaged userbase, and 3) AI/Performance+ adoption. PINS is working with digital ad resellers, Google Ads Manager, and third-party partners (e.g. Amazon) to establish new advertiser relationships and improve monetization in international markets, which account for ~83% of PINS’ users but only ~25% of its revenue. Gen Z is PINS’ fastest-growing cohort and represents >50% of users, while monetizing at per-user levels similar to those of older cohorts, providing a healthy foundation for future revenue growth. Management’s decision to increase “shopability” on the platform by focusing on more lucrative lower-funnel ads is resonating with users, as evidenced by outbound clicks to advertisers increasing more than 5x over the last 3 years. Meanwhile, MAUs and engagement levels continue to rise, with MAUs growing ~11% Y/Y to a new all-time high in 2Q26 (11th consecutive quarter of double-digit MAU growth) and yet PINS’ userbase still only represents ~8% of the world population. Performance+ now accounts for 30% of lower-funnel revenue, despite launching just over a year ago, while in recent testing, SMBs using Performance+ saw a 28% increase in return on ad spend, which could ultimately unlock incremental allocations from a largely untapped advertiser base (SMBs ~15% of revenue).
PINS plans to gain operating leverage through AI-based efficiencies, disciplined spending on R&D and marketing, and mid-teens revenue growth as it progresses towards its medium-term target for low-30% Adjusted EBITDA margins (vs. 30% in ‘25). Despite tangible growth levers and robust profitability, shares trade at a forward (FY27) EV/EBITDA multiple of ~6.8x, or a ~36% discount to peers (RDDT, SNAP, META, GOOGL, TTD).
How Management Allocates Capital
Management’s top priority is investing in product and technology innovation to support its rapidly scaling network and improve the user experience. Management has capitalized on recent price weakness to buy back $2.0B worth of stock year-to-date (17.4% of current market cap). With a net cash balance sheet, management should have ample flexibility to tap into the remaining $1.9B of buyback authorization while meeting the business’s relatively low reinvestment needs.
We originally posted our investment case for PINS on March 24, 2025.