The Meta’s (FB) report had a strong impact on the U.S. stock market, unfortunately, a negative one. For the first time in its history, this social network faced a decrease in the number of active users.
After Meta’s weak report, the former Facebook, Snap, and Twitter assets also fell, showing declines of 19% and 8%, respectively.
In his speech, the CEO of Meta, Mark Zuckerberg, talked about the competitive wars of his platform with TikTok, which is changing the habits of people spending time online. At the same time, he noted that Instagram was starting to gain momentum with the development of short Reels videos. But that was not enough to keep the balance.
Still, the company was badly affected by the article in the Wall Street Journal by a former employee of the company, where she spoke about unethical business practices in the company. This publication put serious pressure on Meta’s securities, which still cannot recover.
The boycott of Donald Trump’s supporters a year ago and the one-sided coverage of the pandemic also displeased many users.
After Meta’s report, which pulled down shares of other social networks, investors started to wonder about the future of the advertising industry and changing consumer habits.
Now, people are spending less time on popular apps. And it is another blow to social networks. Two years of pandemics and people’s desire to spend time away from home, taking a break from gadgets, are the reasons.
Is social media over? Let’s try to figure it out using the example of another platform, Pinterest.
Pinterest stock (PINS) was rising for most of 2021, but when the paper hit the $81 level, sellers grabbed the initiative and have kept it so far. In February 2022, this company made its first annual profit, causing the paper to rise 32%. Should we return to buying this stock or leave it on the waiting list?
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Pinterest is where people come for new ideas and inspiration. Before starting any new project, many people go here to be inspired by the pictures or videos on the site. New ideas for the kitchen, how to organize a wedding, or interestingly cook a meal can all be found on the platform. It is used by advertisers who promote their products or services on certain pages. For example, if a Pinterest user is going to do a kitchen renovation, Home Depot will advertise their products on such pages or even include a video with practical advice.
Pinterest is always looking for new ways to attract customers. In October 2021, the company launched Pinterest TV, where you can watch a show about DIY projects or beauty ideas. Moreover, Pinterest users can use augmented reality technology to see an item firsthand before the purchase.
New growth opportunities
We, as investors, are happy that the company has room to grow. And here we are talking about a place in the market. In this business, the international market is very small, and there are huge opportunities for the company here. The jump in revenue in Q3 2021 was primarily the result of the issuer’s entry into the international arena, where the company has the highest user activity. In the United States, activity per month was 89 million in Q3 2021, and in overseas markets, it exceeded 350 million, a 4 percent increase over the same period in 2020.
Pinterest has room to grow in terms of content monetization as well. This platform is an ideal place for e-shopping. By the way, purchases through the website were another driver of revenue growth in Q3 2021.
When users come to the platform, they are already set up to buy and are only looking for an idea for which they are willing to give money.
Here the company works to improve relationships with both users and sellers. For some, Pinterest comes up with convenient ways to browse content (pictures, videos, virtual reality); for others, it offers a search for potential customers on its platform. All of this has a nigh-on magnetic attraction.
Excellent financial state
The year 2021 was a turning point for the company. It was the year when the issuer received its first-ever annual profit.
The day before, the company reported net income for 2021, which amounted to $316.4 million, or $0.46 per share. The platform’s annual revenue exceeded $2 billion, which happened for the first time. Compared to the previous year, it increased by 52%.
During the earnings period, 431 million people visited the platform, slightly below analysts’ expectations of 448 million visits. The company attributes this decline to the effects of a weakening pandemic, which, however, did not prevent the issuer from increasing revenue per user immediately by 36% to $5.79.
The company’s Q4 2021 revenue showed a 20% increase to $847 million. The figure exceeded the forecast of analysts at Refinitiv, who expected revenue of around $827 million. Net income for the period was $174.7 million, or $0.25 per share, compared with $207.8 million, or $0.43 per share, a year earlier.
The paper has potential and could show good growth in 2022. A positive quarterly report will attract investors to this platform. As for the purchase, we recommend that you wait. Let the price fix above $40.