Shares of Pinterest (PINS.US), US social media company, are trading around 20% higher in premarket today. Stock reported Q2 2022 earnings yesterday after the close of the session. Those were disappointing but stock rallied anyway as an activist investor confirmed stake in the company.
Profits disappoint but sales remain resilient
Headline results reported by Pinterest were disappointing with profits coming short of market expectations. Moreover, on an unadjusted basis the company reported a net loss of 43.08 million, down from $69.4 million profit in Q2 2021. This translates to an unadjusted loss per share of $0.07. However, there were also some positives in the report. Revenue came in-line with market expectations while the number of monthly active users dropped less-than-expected.
Pinterest Q2 2022 results
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Adjusted EPS: $0.11 vs $0.14 expected
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Revenue: $666 million vs $665.5 million expected (+9% YoY)
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Adjusted EBITDA: $92 million vs $128.2 million expected (-48% YoY)
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Monthly Active Users: 433 million vs 429 million (-5% YoY)
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Average revenue per user: $1.54 (+17% YoY)
Pinterest noted that deteriorating macroeconomic landscape creates uncertainty for its major advertiser partners. This echoes similar comments made by other social media companies, like Meta or Snap, that also hinted at weaker ad revenue outlook going forward. Pinterest said that it expects Q3 2022 revenue to grow at mid-single digits on a year-over-year basis, which would be weaker than analysts expectations of 12% YoY revenue growth.
Activist investor to the rescue
Wall Street Journal reported on July 15 that Elliott Management, a well-known activist investor, built a 9% stake in Pinterest. News sent Pinterest shares 15% higher that day. Elliott Management confirmed following Pinterest's earnings release that it indeed built a stake in the company and expressed support for CEO Bill Ready and his plans. Elliott said that Pinterest is a strategic business with significant growth potential, which encouraged an activist investor to become Pinterest largest shareholder. Pinterest shares traded around 10% higher after earnings release but before Elliott's statement. Those gains extended to 20% following Elliott's confirmation.
A look at the chart
According to current pre-market quotes, shares of Pinterest (PINS.US) are set to launch today's Wall Street session near the $23.80 mark. This means that stock would make a meaningful break above the 200-period moving average on H4 interval, that has been limiting upward moves recently (orange circles on the chart below). Moreover, stock would also clear the $21.50 resistance zone that halted advance during a false breakout above the aforementioned moving average in mid-July. However, even after such a big price jump, Pinterest would still be trading around 35% year-to-date lower. Should the stock open as currently quoted in pre-market, the key levels to watch would be $21.50 support zone and $26.75 resistance zone.
Source: xStation5
