PINS signed an agreement to acquire THE YES this month
Pinterest Inc (NYSE:PINS) is a global social media company that primarily operates a platform designed for personalized online shopping. On June 2, Pinterest announced the signing a definitive agreement to acquire THE YES, an AI-powered shopping platform for fashion that enables users to shop a personalized feed based on their active input on brand, style, and size. In the months following the closing of this transaction, PINS plans to merge the THE YES app and website to allow the social media company's teams to focus on technology integration.
Pinterest stock has lost 42% this year, and 68% year-over-year. The equity has yet to close the mid-May bear gap that sent it to its May 24, two-year low of $16.14, with familiar pressure at the 40-day moving average rejecting yesterday's rally. PINS has managed to break back above several shorter-term trendlines, though, including its 20-day moving average.
The social media stock now offers a much more attractive valuation at a forward price-earnings ratio of 21.79 and a price-sales ratio of 5.79 after PINS' massive fall in price over the past year. These figures represent a fair value given Pinterest’s rapid and consistent top line growth rate. The social shopping company has managed to increase its yearly revenues a jaw-dropping 253% since fiscal 2018, reporting a 52% increase for fiscal 2021 alone. PINS is also expected to end fiscal 2022 with $3.04 billion in revenues, indicating 17.8% estimated revenue growth. In addition, expectations are that Pinterest will generate $3.74 billion in revenues by fiscal 2023, which would represent 23.1% annual growth in comparison to fiscal 2022.
However, PINS has yet to find the same level of consistency on the bottom line. For example, the social media name is expected to conclude fiscal 2022 with a 15.9% decrease in earnings. Nonetheless, Pinterest is expected to bounce back by fiscal 2023 with 22.1% earnings growth. The global social media name also maintains an excellent balance sheet with $2.68 billion in cash and just $202.57 million in total debt, making the stock one of the safest and best valued growth stocks on the market.
Finally, it's worth noting that Pinterest options can be had at a relative bargain right now. This is per its Schaeffer's Volatility Index (SVI) of 72%, which sits in the 31st percentile of its annual range. In other words, options players are pricing in relatively low volatility expectations at the moment. What's more, PINS' Schaeffer's Volatility Scorecard (SVS) of 82 (out of a possible 100) means the stock tends to outperform said volatility expectations -- a good thing for buyers.