PINS

Publicly traded companies mentioned herein: Pinterest Inc (PINS), Shopify Inc (SHOP), Snap Inc (SNAP)

Highlights

The presenter is long shares of Pinterest Inc (PINS), the ~$25B social commerce platform that he believes is making major strides in its advertising business. Until recently, bearish investors have pointed to the fact that PINS had been around for a decade without monetizing and that it was behind other digital ad platforms. In 2016, the company hired CFO Todd Morgenfeld to start commercializing the platform. The presenter believes investors are now starting to see the impact of these efforts, evidenced by PINS’s share price more than doubling in 2020. Going forward, he sees continued upside on the back of positive macroeconomic factors, improving adtech, and a strong management team that is cautious about monetizing too aggressively at the expense of its user base. He anticipates PINS generating >$3B of revenue in 2022 (with significant incremental upside), and putting an ~11x multiple on that figure yields his ~$55 base case share price. If the company can continue to execute over the next couple of quarters as it has recently, the presenter thinks PINS could receive a ~15x revenue multiple in line with SNAP, bringing his bull case price target to ~$75 per share. His downside estimate is ~$30 per share, and believes this risk/reward profile is attractive for a company that may be experiencing a breakthrough as a major digital advertising platform.