Earnings can be tough to navigate, particularly for those that have yet to report their first quarterly result as a public company. Lyft (LYFT) disappointed investors earlier this month and now it's Pinterest's (PINS) turn.
The company's quarterly results weren't enough to impress, with shares tumbling more than 17% at one point in Thursday's after-hours trading session. Those losses had been pared to "just" 10% in Friday's trading session -- that later closed down nearly 13.5% to $26.70.
Is the negative reaction justified? Pinterest reported a non-GAAP loss of 32 cents per share, an improvement from the 38 cent loss in the same period a year ago. However, analysts were looking for a loss of just 11 cents per share. The top line came in better than the bottom line, with revenue of $202 million besting analysts' expectations of $200.7 million and growing 54% year over year.
Full-year revenue guidance of $1.06 billion to $1.08 billion was in-line with consensus expectations of $1.07 billion. That doesn't seem like too bad of a quarter to me, especially considering that global monthly active users grew 22% from a year earlier to 291 million. With that type of growth, it won't be long before Pinterest has more users than Twitter (TWTR) .
Trading Pinterest Stock
Pinterest stock is recovering nicely off the lows, rallying from sub-$26 to almost $28 by midday trading. That shows that buyers -- at least initially -- are willing to own this stock down near these levels. The question now becomes: Will it last?
As such, there are some concerns on the charts. First, the stock took out this month's low, which came earlier in the week when Pinterest stock fell to $26.39. Second, we could see former resistance become resistance again, while prior support come become resistance moving forward. That's if the stock is unable to reclaim these levels in the next few sessions.
Specifically, look to see how Pinterest stock handles prior downtrend resistance (blue line). This trend pressured shares lower throughout the month, before the stock pushed through this mark on Tuesday. On Wednesday and Thursday, that move through resistance was solidified when PINS stock continued higher.
Now below prior support levels -- like $28.40 range support (thin black line) or the post-IPO 61.8% retracement near $27.71 -- and there are concerns about whether these marks will turn into resistance. If they do, watch for a break of Friday's low. Should we get it, bulls will need to wait to see where Pinterest stock regains its footing at lower prices. Above these marks and Pinterest can stabilize and perhaps move higher despite its poorly received earnings report.
For now, Pinterest stock is a "show-me" stock and needs to prove that it's worth the benefit of the doubt.
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This article is commentary by an independent contributor. At the time of publication, the author had no positions in the stocks mentioned.