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How the Pinterest Plummet Shows the Importance of Valuations

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Pinterest (PINS) failed to impress investors when the company released its first earnings report.

The adjusted loss in the quarter narrowed to 32 cents a share from 38 cents a year earlier but was wider than forecasts that called for a loss of 11 cents.

Revenue in the first quarter rose 54% to $202 million, ahead of analysts' estimates of $200.7 million.

The company promptly fell 15% in after-hours trading Thursday night.

Jeff Marks, senior portfolio analyst with Jim Cramer's Action Alerts PLUS investing club, weighed in on the Pinterest earnings and how investors can use the earnings for some investing education. 

"Pinterest, what you need to keep in mind is this, this thing IPO at $19. It closed the day around $24-$25 and then it immediately ran after that. So what you're seeing today is after the first quarter, even though the monthly active users (MAU) were pretty good, that miss on the bottom line that you talked about is really freaking out of people out investors today. And where's the stock going back to? Right back to that $25 price," said Marks. "So I think that's what investors or traders are really looking at today and trading against it. To me, it doesn't look like the long-term thesis changed. So, again, it's really just about understanding valuations, recognizing when you're being greedy, when you're being piggish because maybe, uh, you know, just the way the stock taxing today. That was the time to take some off."

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