Skip to main content

Pinterest Shares Drop After Citi Downgrade - Price Target Up

Citi downgraded shares of image-sharing social-media site Pinterest to neutral and lifted its price target to $35.
  • Author:
  • Publish date:

Shares of image-sharing social-media platform Pinterest  (PINS) - Get Pinterest, Inc. Class A Report on Monday were lower after analysts at Citi downgraded the stock to neutral from buy. 

The firm raised Pinterest's price target to $35 from $25. The new target is in line with its Friday closing price of $34.19. At last check Pinterest shares were down 4.7% to $32.58. 

Analyst Jason Bazinet says Pinterest's valuation doesn't allow "much room for downward estimate revisions (or higher interest rates)."

After the Pinterest downgrade, Facebook  (FB) - Get Meta Platforms Inc. Class A Report is the only social-media stock with a buy rating at Citi. 

The firm sees three red flags for investor assumptions about U.S. social media stocks. 

TheStreet Recommends

Those red flags include: Wall Street estimates for $21 billion of top-line growth in 2021 and 2022, up from $16 billion of growth in 2019 and 2019; Wall Street forecasts for social-media firms to capture a substantial portion of non-search digital-ad growth over the next two years; and estimates for smaller social-media firms to capture 9% to 11% of ad growth in 2021 and 2022, up from 7% to 9% growth expectations. 

"As the covid-19 recession unfolded, every form of Internet advertising - search, social, display and video - came under some pressure," Bazinet wrote. 

"But if you measure the difference between the growth in second-quarter 2020 versus 2019, it’s not clear that social media is more insulated from the recession than non-social-media platforms."

Bazinet concludes that just because social-media companies can still generate growth during a recession, that does not make them special. 

Rather, their ability to generate growth in the second quarter is more of a function of how each platform was growing prior to the recession.