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Pinterest Shares Hit Record High After Q4 Earnings Beat, 2021 Investment Plans

A bullish outlook and planned investments in content and advertising growth has Pinterest shares surging to a record higher after better-than-expected fourth quarter earnings.

Pinterest Inc.  (PINS) - Get Pinterest Inc. Class A Report shares opened at an all-time high Friday after posting a surge in fourth-quarter revenues as home-bound shoppers flocked to the image-sharing social media platform over the holiday season.

Pinterest said its quarterly revenues for the three months ending in December rose 76% from last year to $706 million, well ahead of the Street consensus forecast of $645 million. Adjusted profits were also firmer, rising to 43 cents per share and beating Street estimates by more than 10 cents.

Monthly active users on the platform, Pinterest said, rose 37% to 459 million, with around 98 million of that total coming from the United States. 

"People need a place to dream and be optimistic, away from politics and bad news, they need a space to focus on themselves based on what they want to do, not what other people will like," CEO Ben Silbermann told investors on a conference call late Thursday. "And businesses want to reach people early in the planning process before they decide what to buy for their lives. Even creators are telling us that they want a place to do more than just entertain, they want to be able to enrich other people's lives."

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 "Moving into 2021, one of the big areas that we're focused on is driving more relevant ads, and we're going to do that by growing the number of advertisers," he added. :We think that if we can provide really relevant ads, especially in surfaces like search, it's a win-win. It helps consumers because they're seeing inspiring content relevant to what they do every day. It's great for advertisers because they're finding consumers who are early looking for inspiration, but they haven't yet decided exactly what they're going to buy."

Pinterest shares were marked 6.7% higher in early trading Friday to change hands at $83.00 each, an all-time high that extends the stock's six-month gain to around 135% and values the San Francisco, California-based group at just over $51.5 billion.

"It all fell into place in 2020 for Pinterest as its inherent content discovery function rose in utility to the consumer suffering through various levels of shelter-in-place," said Credit Suisse analyst Stephen Ju, who lifted his price target on the stock to by $7 to $81 a share, while maintaining a neutral rating, following last night's earnings. 

"On the advertiser front, its steps to connect consumer demand with e-commerce/retail inventory/supply through the onboarding of partner catalogs as well as automation tools to make spending on the platform easier – all came together to accelerate revenue growth to 76% in 4Q20. 1Q21 guidance suggests that this momentum is set to continue as management anticipates ~70% revenue growth," Ju added.