Pinterest Stock Surges Following Positive Remarks from Goldman and RBC

Pinterest shares saw a notable increase on Tuesday following positive recommendations from both Goldman Sachs and RBC Capital, which identify substantial growth potential for the social media platform.

Currently, Pinterest shares are trading over 1% higher at approximately $32.75.

Goldman Sachs has included Pinterest on its Americas Conviction List, anticipating strong top-line growth and expanded EBITDA margins. Meanwhile, RBC Capital pointed to the company’s under-monetized state and its strategic advertising partnerships.

Goldman Sachs maintains an optimistic outlook for Pinterest’s growth, estimating mid-to-high teens percentage growth in revenue and an annual EBITDA margin expansion of around 300 basis points over the next five years. They believe Pinterest is well-positioned to sustain impressive top-line growth while steadily expanding its adjusted EBITDA margins, noting that the company is valued similarly to a major tech competitor, yet is growing cash earnings at a significantly faster rate.

Key factors contributing to this growth include an increase in average revenue per user (ARPU), enhanced user engagement, and high incremental margins. Goldman Sachs has set a 12-month price target of $46 for Pinterest, indicating considerable upside potential.

RBC Capital also highlighted Pinterest’s growth prospects, particularly with recent initiatives such as direct links and a partnership with a major online retailer. These efforts are expected to enhance ad relevance and conversion rates, thereby improving returns on advertising spend.

RBC Capital views Pinterest as under-monetized but believes the platform can accelerate revenue growth without needing a substantial increase in its user base. They have maintained an Outperform rating and set a target price of $48, using a multiple of expected 2025 EBITDA.

Both firms underscored the significance of Pinterest’s advertising strategy and partnerships, with Goldman Sachs emphasizing the company’s capacity to expand its advertising offerings and RBC highlighting the potential for increased ad volume and improved user engagement.