Blogs -Snapchat Reported Accelerating Growth. Here’s What to Expect From Pinterest.

Snapchat Reported Accelerating Growth. Here’s What to Expect From Pinterest.


April 26, 2021

author

I/O Fund

Team

Pinterest reports on Tuesday, April 27 after market close. The stock recently dropped as much as 10.8% in one day due to reports that the company had a soft ending to Q1.

We wanted to take this opportunity to present the app data for Pinterest and provide an in-depth preview of the upcoming earnings report, which shows approximately 4% sequential growth and 21% growth year-over-year for DAUs. Interestingly enough, this is approximately the same YoY growth level that Snap reported for DAUs in its most recent earnings report, which we cover below.

A glimpse at the App Data

Please note, we use app data to spot trends—we do not use app data to make earnings calls on what a company will report. We use Apptopia data, a provider of app intelligence and competitor tracking service.

Pinterest user engagement remained strong in Q1 2021 despite loosening of Covid restrictions, based on app data from Apptopia. Similar to Snapchat, which reported earnings April 22 and grew DAUs 22% YoY, Q1 user trends for Pinterest were mostly positive.

In Q1, daily active users were up 4.12% QoQ versus 5.09% the previous quarter, and up 21.16% YoY.

Pinterest daily active users

Source: Apptopia with graphs by David Marlin 

In Q1, monthly active users were up 4.09% QoQ versus 5.15% the previous quarter, and up 21.64% YoY.

pinterest monthly active users

Downloads were down 5.80% QoQ versus up .28% the previous quarter, and up 18.69% YoY.

pinterest total downloads

Sessions were up 1.99% QoQ versus 5.11% the previous quarter, and up 20.07% YoY.

pinterest total sessions

Pinterest reports Tuesday, April 22 after close and is guiding for Q1 2021 revenue growth in the low 70% range YoY with non-GAAP operating expenses at a similar level compared to last quarter. The consensus estimate is $475.11 million, up 74.71% YoY, according to Seeking Alpha.

Pinterest executives have warned that reopening could reduce engagement. Like other adtech stocks, Pinterest saw record high engagement but reduced advertiser demand in Q1 and Q2 2020, as advertisers slowed or paused their spend. Advertisers during these early-Covid quarters shifted away from awareness campaigns and towards high performance ads. Later, revenue growth accelerated in Q3 and Q4 as advertiser demand returned.

According to last week’s ad-tech analysis, we anticipate a small deceleration YoY in user engagement due to tougher comps—engagement reached record levels last March, according to the Q1 2020 earnings report—with strong international growth. Despite usage trends being mixed, if we see an ad rebound revenue can still climb higher.

Pinterest fell as much as 10.8% on April 16, after a cautious report from independent research firm Cleveland Research that was summarized by Seeking Alpha.

Pinterest ended Q1 had a softer end to Q1 "than mid-quarter expectations would indicate and some agencies/partners are noting a deceleration from Q4 levels," according to Seeking Alpha’s synopsis of the report, which added that "some omni-channel retailers are seeing Pinterest spending decelerating."  

Below, we look at Q1 2021 results from Snapchat for clues about the potential adtech rebound and compare this to Apptopia data, a provider of app intelligence and competitor tracking service.

What to look for in the upcoming report

Going into Covid, Pinterest had less exposure to highly impacted verticals such as travel, according to the Q1 earnings report. When asked in Q1 what is holding Pinterest back from capturing more travel-related advertising dollars, CEO Ben Silbermann said the company is optimizing for core shopping verticals such as home décor and apparel.

“I will say that when we look at our plans for increasing kind of purchasing activity on Pinterest, travel is not the first place that we’re optimizing for,” Silbermann said. “We think there’s a really big opportunity in a lot of our core shopping verticals, which is why shopping and conversion-driven events continues to be a focus.”

Ad dollars follow planning activity, which is why ad spending moved away from categories such as wedding planning and travel events, according to the Q1 earnings report. As normal events and activities return, we expect ad dollars to follow at some point this year.

For the full year, Pinterest executives are expecting positive trends due to investments in new tools like shopping and automation; international expansion; and monetization into Latin America during the first half of the year, according to the last earnings report. Latin America is forecast to see 10.2% YoY growth in digital ad spending this year, after an 18.4% drop last year, according to a report from Dentsu.

Snapchat Doubles Active Advertisers

Global digital ad spending is projected to grow 10.1% YoY, with 18% growth in social media, according to the Dentsu report, which we discussed recently in our earnings coverage of Pinterest, Snapchat, Twitter, and Facebook.

To read our adtech earnings preview, click here.

Snapchat reported earnings April 22, achieving the highest year-over-year revenue and daily active user growth rates in over three years, according to the earnings report. Snapchat grew revenue to $770 million, up 66% year-over-year, and grew DAUs 22% year-over-year to 280 million. The company also approximately doubled its active advertiser base YoY, and offered strong guidance of 80% to 85% YoY revenue growth.

Traditionally strong categories for Snapchat, such as theatrical films, have started to return, and the company is seeking to increase categories where it is well positioned but has had less exposure, including travel and leisure.

The approach could pay off, according to the report from Dentsu. Sectors that restricted advertising the most due last year are set for the biggest recovery, with ad spend in travel and transport forecast to grow nearly 30%.

2021 ad spend growth forecasts by industry

Conclusion

Despite mixed reports about Pinterest’s upcoming earnings report, we are seeing similar year-over-year growth in DAUs as Snapchat reported, which is 21.16% and 22% respectively. We are hopeful that with an ad-rebound in many sectors that Pinterest will also have a healthy earnings report, where low ad revenue last year will offset tough comps in usage.

Disclaimer: I/O Fund currently owns shares of Snap and Pinterest. In addition, the author, Jessica Ablamsky, owns shares of Pinterest, has owned options on Pinterest, and may own options on Pinterest again in the future. Jessica Ablamsky has owned options on Snapchat in the past and may purchase shares or own options again in the future. The content in this article is intended to be used for informational purposes only. The author has not received any compensation from any third party or company discussed in this article. The content is the expressed opinions of the author and is intended for educational and research purposes. Any thesis presented is not a guarantee of any particular stock’s future prices, so please factor this risk into your own analysis. It is very important that you do your own analysis before making any investments based on your personal circumstances. The author is not a licensed professional advisor. Please seek counsel form a licensed professional before acting on any analysis expressed in this article, to see if it is appropriate for your personal situation.

Gains of up to 403% from our Free Newsletter.

Here are sample stock gains from the I/O Fund’s newsletter --- produced weekly and all for free!

+344% on Nvidia

+403% on Bitcoin

+218% on Roku

*as of March 15, 2022

Our newsletter provides an edge in the world’s most valuable industry – technology. Due to the enormous gains from this particular industry, we think it’s essential that every stock investor have a credible source who specializes in tech. Subscribe for Free Weekly Analysis on the Best Tech Stocks.

If you are a more serious investor, we have a premium service that offers lower entries and real-time trade alerts. Sample returns on the premium site include 324% on Zoom, 601% on Nvidia, 445% on Bitcoin, and 4-digits on an alt-coin. The I/O Fund is audited annually to prove it’s one of the best performing Funds on the market with returns that beat Wall Street funds. 

beth

More To Explore

Newsletter

Cybersecurity Image

The Strongest Cybersecurity Stocks In Q3

Cybersecurity stocks have performed well in 2023, rising about +26.5% YTD, with the security backdrop boosted by an increase in data breaches and ransomware.

December 04, 2023
Nvidia's Fiscal Q3 Earnings Preview: The Pressure Is On

Nvidia’s Fiscal Q3 Earnings Preview: The Pressure Is On

Nvidia has surged this year with 241% gains YTD, which has more than doubled the returns of the FAANGs. This is no small feat considering it’s widely understood Big Tech is holding up the broader mark

November 27, 2023
Apple Building

Apple’s Services Growth Flywheel Continues To Strengthen

Apple’s Services segment was one of the brightest spots in a relatively in-line earnings report at the beginning of November, topping an $85 billion run rate as growth jumped back to the high double-d

November 21, 2023
Tesla Sells 33% Of Vehicles Below Average Cost, BYD Pulls Ahead

Tesla Sells 33% Of Vehicles Below Average Cost, BYD Pulls Ahead

BYD more than doubled Tesla’s China sales in October as Tesla’s sales slipped on a month-over-month basis, while NEV startups showed strong sales numbers across the board. China’s new energy vehicle (

November 14, 2023
Solar Panels

Solar Stocks Still Searching For A Bottom

Solar is arguably one of the market’s most sold-off industries at the moment, with the Invesco Solar ETF falling more than 42% YTD as the industry struggles to find growth in a high-rate environment.

November 07, 2023
Five Stocks (Not Seven) Can Lead to New Highs

Five Stocks (Not Seven) Can Lead to New Highs

The majority of other sectors are confirming a continuation of the 2022 bear market, meanwhile, a handful of big tech names, with outsized weighting in the major indexes, suggest that they want to go

October 27, 2023
Big Tech Stocks: Q3 Earnings Preview

Big Tech Stocks: Q3 Earnings Preview

Earnings season has officially kicked off, with Big Tech headlining a busy week next week: Microsoft and Google report on Tuesday, followed by Meta on Wednesday, and Amazon on Thursday. Big Tech stock

October 22, 2023
Apple Building

AI Could Be Apple’s Next Chapter

After Nvidia added $750 billion in value this year on the backs of surging AI chip demand, investors are quickly searching for the next trillion-dollar AI winner. AI is the best investment opportunity

October 18, 2023
AI is the Best Investment Opportunity of our Lifetime: Video Interview

AI is the Best Investment Opportunity of our Lifetime: Video Interview

Real Vision invited Beth Kindig back for a candid interview with Raoul Pal for a one-hour discussion on how to position for AI. As discussed in the interview, the reason that AI will be the best inves

October 06, 2023
The Next Market AI Will Disrupt Is Cybersecurity

The Next Market AI Will Disrupt Is Cybersecurity

Cybersecurity is one of the highest costs that enterprises face at 12% of IT budgets on average, and this cost is rapidly rising. While a company can lay off staff or reduce marketing and R&D expenses

October 04, 2023
newsletter

Sign up for Analysis on
the Best Tech Stocks

https://bethtechnology.cdn.prismic.io/bethtechnology/e0a8f1ff-95b9-432c-a819-369b491ce051_Logo_Final_Transparent_IOFUND.svg
The I/O Fund specializes in tech growth stocks and offers in-depth research for Premium Members. Investors get access to a transparent portfolio of 30 positions, a private forum, webinars, and real-time trade notifications. Sign up for Premium.

We are on social networks


Copyright © 2010 - 2023
Get Free Weekly Analysis on the Best Tech Stocks