We recently published a list of Jim Cramer’s Latest Portfolio: Top 10 Calls Before August. Since Pinterest Inc (NYSE:PINS) ranks 9th on the list, it deserves a deeper look.
Earlier this month, Jim Cramer during his program on CNBC talked about the importance of optimism right now and explained why he sees hope for America in the future.
Cramer said that the recent political violence made things look “dark” and “grim.” The CNBC host said this election year has been a “mess, something very much in sync with the tone of the country.”
However, Cramer referred to the recent comments from the CEO of the world’s largest investment manager, and said it seems the end of the world is “not on the table.” Cramer called the executive’s comments a “breath of fresh air” and agreed with the notion that the US economy needs more growth and less business regulation. Cramer said that America has a huge deficit problem but it cannot tax its way out of this.
“But we can grow our way out of it.”
Cramer said we should understand that capitalism is a “force for good, a force for wealth generation, not just for the rich, but for everybody, as long as they invest.”
Jim Cramer urged his viewers to invest in individual stocks.
“I don’t care what you invest in, as long as you invest.”
For this article we watched the latest programs of Jim Cramer and picked 10 stocks he’s talking about. With each stock we have mentioned hedge fund sentiment. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
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Pinterest Inc (NYSE:PINS)
Number of Hedge Fund Investors: 64
Jim Cramer hit the “buy, buy, buy” button for Pinterest Inc (NYSE:PINS) in a latest program on CNBC.
“I think this by the way along with Reddit are the new companies you have to be in because of advertising dollars.”
Pinterest Inc’s (NYSE:PINS) biggest strength and moat is its unique niche audience and the fact that it’s playing on its own turf instead of competing with giants like TikTok or Facebook. Over 500 million active users turn to Pinterest Inc (NYSE:PINS) every month with a clear intention: get inspiration for ideas and buy stuff online for their home or office. Women make up two-thirds of Pinterest’s user base, and over 40% are Gen Z, the fastest-growing cohort. The company has taken several steps to better monetize its audience. Since 2023, they’ve enhanced click-through rates, with 97% of lower funnel revenue coming from direct links, more than 80% previously. Pinterest Inc (NYSE:PINS) API initiative for third-party integration is also working, with a whopping 40% of revenue coming from that step. The company talked about this during Q1 earnings call:
“One of our most important initiatives began in earnest in 2023 with our efforts to increase adoption of the API for conversions, which provides a server-to-server connection for advertisers to measure and attribute conversions. I’m pleased to report that we’ve grown the adoption of the API to nearly 40% of total revenue, up from 28% of total revenue at our investor day last September.
As I’ve mentioned previously, revenue from retail advertisers who have adopted the API for conversions tends to grow significantly faster than revenue from those who have not yet adopted. This trend continued to hold in Q1 and underscores our desire to drive more privacy-centric measurement, particularly to lower funnel advertisers where it’s most impactful. We’re seeing a reinforcing effect take place. As advertisers adopt and see the benefits of shopping ads, mobile deep linking, or direct links, they are more incentivized to adopt our privacy-centric measurement.”
Analysts believe Pinterest’s partnership with Amazon will also boost Pinterest Inc (NYSE:PINS) revenue. This year the partnership is expected to bring in about $120 million of incremental revenue.
Meridian Contrarian Fund stated the following regarding Pinterest, Inc. (NYSE:PINS) in its fourth quarter 2023 investor letter:
Pinterest, Inc. (NYSE:PINS) is a social media platform that enables visual discovery and generates revenue mainly through online advertising and e-commerce. Earnings declined after the company saw tremendous user and revenue growth in 2020- 2021 and grew operating expenses as if the pandemic-fueled growth trajectory would continue. Normalized growth trends and a macro slowdown that affected ad spend eventually hurt earnings per share. We believed that Pinterest had a significant opportunity to resume earnings growth because:
- Pinterest has an attractive franchise and appears under-monetized vs. social media peers given how well its user experience lends itself to online shopping. 2. Its new CEO, who led commerce initiatives at Google, may portend a virtuous self-help/self-improvement opportunity to unlock monetization. 3. The high levels of operating expense growth vs. sales prior to our investment provides an opportunity for leverage and expense reductions to improve earnings. Pinterest’s stock performed well in the quarter as the thesis played out and the company reported strong results while raising 2023 guidance. We pared back our position during the quarter due to stock appreciation and as the investment becomes less contrarian as our thesis plays out.”
Overall, Pinterest Inc (NYSE:PINS) ranks 9th on Insider Monkey’s list titled Jim Cramer’s Latest Portfolio: Top 10 Calls Before August. While we acknowledge the potential of Pinterest Inc (NYSE:PINS), our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than PINS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
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