Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Snap Vs Pinterest: Which Stock Is A Better Buy?

By Investing.com (Haris Anwar/Investing.com)ETFsFeb 12, 2020 15:39
ph.investing.com/analysis/snap-vs-pinterest-which-stock-is-a-better-buy-25927
Snap Vs Pinterest: Which Stock Is A Better Buy?
By Investing.com (Haris Anwar/Investing.com)   |  Feb 12, 2020 15:39
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

With the largest U.S. social media companies coming under more intense regulatory scrutiny, investors in the digital space are looking to diversify their investments and take some exposure to small stocks which don’t carry antitrust risk.

In this group, we have short-listed Snap (NYSE:SNAP) and Pinterest (NYSE:PINS) to analyse their current earning momentum and the possible risks that come with their small size. Let’s take a deeper look:

Snap Turnaround Shaky

The operator of photo-sharing app Snapchat was one of the most successful turnaround stories of 2019, after it started beating estimates in recent quarters. But that string of wins ended last week when the company reported sales for the fourth-quarter that missed analysts’ expectations.

The Santa Monica, Calif.-based social-media company reported a 44% jump in sales from a year earlier to $561 million, but it failed to cut its losses, which widened to $0.17 a share against analysts’ estimate of $0.12 a share.

Despite some disappointment on the top-line numbers, Snap continued to add daily users to its app, which went through a major redesign last year. Its daily user base hit 218 million in Q4, up 8 million, or 3.8%, from the previous quarter. The figures marked the fourth straight quarter of growth in the metric.

This mixed earnings report, however, attracted selling pressure that brought an abrupt halt to Snap’s past year rally that had sent its stock soaring more than 100%. At the close of yesterday's session, Snap shares trading at $17.61, down from its $19.03 pre-earnings level.

Snap Weekly Price Chart
Snap Weekly Price Chart


The company’s improving financial and user metrics played a big role in the shares' outperformance last year, but the regulatory oversight that the large social media companies are facing is another big positive for Snap.

An app with a clear and defined audience and with little room for misuse is in a much better position to withstand potential regulatory changes globally than behemoths like Facebook (NASDAQ:FB) and Alphabet's Google (NASDAQ:GOOGL) — the social media heavyweights that some politicians are seeking to break up.

Pinterest Showing Strength

San Francisco-based Pinterest operates a site with more than 320 million monthly active users globally.

It serves as a digital bulletin board for pictures and ideas for furniture, fashion, weddings, recipes and more, allowing users to scroll through a feed of “pins” that contain images or videos. Users can then save the pins to customizable boards to curate ideas for anything from vacation plans to dinner recipes or holiday shopping lists.

Pinterest management believes their appeal to advertisers is very different from that of other social media companies as users come to the site with an intent to make a purchase. That makes advertisements an inherent part of the Pinterest user’s experience, rather than something negative.

After the initial public offering in April last year which raised $1.4 billion, Pinterest stock is showing some signs of strength. In 2019, the company's revenue crossed the $1 billion mark. It now expects revenue to hit $1.52 billion in 2020, helped by new investments that include a verified-merchants program that would initially focus on fashion and home decor.

Recent investments, from boosting the speed of uploads to adding videos with makeup tutorials or cooking directions, have fueled the company’s growth—both in terms of revenue and users. Investors have liked Pinterest’s recent direction, sending its stock up 30% this year. The shares closed yesterday at $24.03. But its value is still 34% lower than the 52-week high of $36.83.

Pinterest Weekly Price Chart
Pinterest Weekly Price Chart

One big risk that’s keeping some investors on the sidelines is that the company is running large losses and it might be a long journey before the company is able to show sustained profitability. Pinterest ended 2019 with a loss of $1.36 billion, or $3.24 a share, for the year, compared with a loss of $63 million, or $0.50 a share, a year earlier. Revenue rose 51% to $1.14 billion, but expenses more than tripled to $2.53 billion.

Bottom Line

Both Snap and Pinterest offer a different risk-reward equation for investors. While Snapchat has a growing young audience, Pinterest has a wider appeal to all age groups with its unique platform that helps people find shopping ideas and inspiration.

Snap, in our view, is riskier than Pinterest despite some signs of stability in its earnings and user engagement metrics. Instagram, owned by much bigger rival Facebook, continues to pose an existential threat to Snap that's unlikely to go away.

Snap Vs Pinterest: Which Stock Is A Better Buy?
 

Related Articles

Snap Vs Pinterest: Which Stock Is A Better Buy?

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email