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Founded in 2008 and based in San Francisco, California, Pinterest is an image-based social media network and mobile app. Pinterest’s growth rate has been exceptional and the site is now available worldwide in 27 languages serving 290 million members.
The company’s growth rate has also attracted companies that have expanded their website presence with the new business pages from Pinterest. The new Pinterest offer for businesses allows them to open a “virtual storefront” made up of pages created to promote their businesses online.
Outlook for Pinterest Stock
In a letter to shareholders, Pinterest reported first quarter revenue of $ 201.9 million, an annual increase of 54%. However, its non-generally accepted accounting principles (GAAP) earnings per share (EPS) showed a loss of – $ 0.32 per share.
Analyst consensus expected revenue of $ 200.7 million and a loss of just $ -0.11 per share, so the market disappointment hit the share price hard. The company included its forecast for full year 2019 in the letter, which was also below analyst consensus.
The company estimated total 2019 revenue of $ 1.055 billion to $ 1.08 billion, an increase of 40 to 43 percent year-on-year. Its estimated adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) were a loss of – $ 45 million to – $ 70 million.
Analysts’ estimates for the whole year similar turnover result of $ 1.07 billion, but a lesser loss of – $ 28.5 million.
While the quarterly loss of $ 0.32 may not look good, the revenue numbers have moved closer to analysts’ estimates. The sell-off of the company’s shares after the earnings release was more driven by full-year forecast numbers, which showed an annual loss almost twice as large as analysts had expected.
Pinterest Chief Financial Officer (CFO) Todd Morgenfeld said the company was in the process of opening new international markets. Additionally, he noted that Pinterest would diversify the company’s advertiser base by investing in self-service tools, which would improve returns both overseas and domestically as ad revenue remains. the main source of profits for Pinterest.
When you buy stocks to invest, new companies like Pinterest may seem highly speculative if you are satisfied with their earnings history, especially if they only became public recently.
A certain period of expansion and investment usually takes place after a company has received large-scale funding from an IPO. This was the case when Pinterest got its last fundraiser in 2017, when it sold $ 1.5 billion in shares to 37 companies, including Goldman Sachs and Rakuten.
Benefits of Pinterest Stock
- Steadily growing membership base
- Increase in income
- A growing international presence
- More commercial offers
- Expanded advertising markets
Cons of Pinterest stock
- Negative earnings
- Large stock float
- High share price after IPO
- Over 150 million additional shares outstanding due to options and restricted stock units
How to buy Pinterest stocks
Buying Pinterest stocks is as easy as buying any other stock listed on the NYSE. Since the company has no upcoming IPO, the only thing you need to buy Pinterest shares is an account with a stock broker and the funds with which to buy the shares.
Of course, you’ll need to choose a broker if you don’t already have one, so we’ll make that our first step. Remember, how you buy Pinterest stocks is just as important as where you trade, so make sure you choose the right broker.
Step 1: Choose a broker
Your first step in buying Pinterest stocks is finding an online broker who meets your needs. Before choosing a broker, decide what type of broker is right for you.
If you have a lot of experience and don’t need bells and whistles on your account, you can probably use a discount broker or commission-free brokerage like Robinhood or Webull.
Step # 2: Practice Trading
If you know you want to buy Pinterest stocks for investing and nothing more, then all you need to know is how much you are willing to pay for the stocks and how much you want to buy at that price.
On the other hand, if you will practice trading stocks, then you should consider trading on a virtual account before you start trading on a funded account.
You can also use a demo account to watch the stock if you expect to get a better price than the current market and to test a new trading strategy.
Most online brokers offer a demo account which allows you to trade the market with virtual money. Trading in a demo account is a bit like training for the big game, you practice until you are confident in your system, then it makes sense to start trading on a funded account.
Pinterest stock has been extremely volatile since its IPO and the release of first quarter results, making the stock an attractive vehicle for short-term trading strategies. Whether you buy Pinterest or any other stock, using a practice account before you start live trading can usually be beneficial to you.
Step 3: fund your account
After you have traded on a demo account with virtual money and gained enough confidence in your trading strategy, then you can fund an account with the broker of your choice.
You can select a different broker than the one you opened your virtual account with, but since you’ve probably familiarized yourself with their platform, you might be better off opening your real account with the same broker.
Step 4: Buy Pinterest stocks
Ideally, you will have learned enough about the Pinterest action by trading on the virtual account, and you will already have an idea of the price point at which you want to buy it.
If you are considering buying Pinterest stocks as an investment, you may want to place a Good until the order is canceled at the price level you have determined to be optimal and simply leave the order in the market until it is executed. Once filled, you could protect your profits if the market starts to rise by placing trailing stop-loss orders.
Is Pinterest Stock Right For You?
Pinterest’s shares might not look like much after its recent earnings report, but neither did Amazon soon after its IPO. Newly listed stocks tend to surprise the crowd both positively and negatively.
In addition, some other IPOs, like Lyft’s recent offering, have not delivered the results that the public and analysts expected, although Lyft is involved in a completely different business.
If you plan to invest for the long term, Pinterest action may be for you. On the other hand, if you plan to trade the stock more actively, you will likely find plenty of opportunities using short-term trading strategies.
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