Why Pinterest Stock Soared 55% in July

What happened

Pinterest (NYSE: PINS) stock skyrocketed 54.7% in July, according to data from S&P Global Market Intelligence. For context, the S&P 500 returned 5.6% last month.

In 2020, shares of the image-sharing platform operator, which went public in April 2019, are up a whopping 86.7% through Aug. 4. The broader market has returned 3.5% over this period.

A woman's hands holding a white computer tablet showing several Pinterest categories on screen.

Image source: Getty Images.

So what

We can attribute Pinterest stock's powerful performance last month to its July 30 release of second-quarter results that delighted investors. Shares soared 36% the following day. 

In Q2, revenue rose 4% year over year to $272.5 million. Growth was driven by a 39% year over year surge in the number of monthly active users (MAUs) to 416 million, which was largely offset by a 21% drop in average revenue per user (ARPU) to $0.70. The COVID-19 pandemic provided a tailwind to user growth because people are spending more time at home. However, it provided a headwind to advertising revenue because the crisis has had a significant negative financial impact on many businesses.

Reported loss per share narrowed 94% year over year to $0.17. Adjusted for one-time items, loss per share widened 17% to $0.07. That result was significantly better than the Wall Street consensus estimate of an adjusted loss per share of $0.13.

PINS Chart

Data source: YCharts.

Now what

Pinterest didn't provide full-year 2020 guidance because of the continued uncertainties surrounding the COVID-19 pandemic. 

However, the company did share that revenue growth for the month of July, through the 29th, was approximately 50% year over year. Taking what appears to be a conservative approach, management guided for third-quarter revenue growth in the mid-30% range year over year.

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Beth McKenna has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Pinterest. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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