Pinterest Stock Lost 22%, Buy Or Wait?
Pinterest (PINS) stock is down 21.8% in a day. The stock looks attractive, but if you are going to buy it, you got to be in it for the long run. Do not expect quick bucks. Consider the following data:
- Size: Pinterest is a $17 Bil company with $4.1 Bil in revenue currently trading at $25.75.
- Fundamentals: Last 12 month revenue growth of 16.8% and operating margin of 6.9%.
- Liquidity: Has Debt to Equity ratio of 0.01 and Cash to Assets ratio of 0.48
- Valuation: Pinterest stock is currently trading at P/E multiple of 8.8 and P/EBIT multiple of 62.3
- Has returned (median) 16.7% within a year following sharp dips since 2010. See PINS Dip Buy Analysis.
While we like to buy dips if the fundamentals check out – for PINS, see Buy or Sell PINS Stock – we are wary of falling knives. Specifically, it is worth trying to answer if things get really bad, and PINS drops another 20-30% to $18 levels, will we be able to hold on to the stock? What is the worst case scenario? We call it downturn resilience. Turns out, the stock has fared worse than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.
A single stock can be risky, but there is a huge value to a broader, diversified approach. If you seek an upside with less volatility than holding an individual stock, consider the Trefis High Quality Portfolio (HQ). HQ has outperformed its benchmark — a combination of S&P 500, Russell, and S&P midcap index — and achieved returns exceeding 91% since its inception. Risk management is key — consider what the long-term portfolio performance could be if you blended 10% commodities, 10% gold, and 2% crypto with HQ’s performance metrics.
Below are the details, but before that, as a quick background: PINS operates as a visual discovery engine offering inspiration for recipes, style, home decor, DIY projects, and more, both in the United States and internationally.
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2022 Inflation Shock
- PINS stock fell 80.7% from a high of $89.15 on 16 February 2021 to $17.19 on 14 June 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
- The stock is yet to recover to its pre-Crisis high
- The highest the stock has reached since then is $44.98 on 25 June 2024 , and currently trades at $25.75
| PINS | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -80.7% | -25.4% |
| Time to Full Recovery | Not Fully Recovered | 464 days |
2020 Covid Pandemic
- PINS stock fell 56.7% from a high of $25.20 on 7 February 2020 to $10.92 on 18 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 6 July 2020
| PINS | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -56.7% | -33.9% |
| Time to Full Recovery | 110 days | 148 days |
It is a good thing to keep in mind how low PINS could go during a downturn. And you should also check how the stock fared when compared with the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 — the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.