Eight out of 10 analysts gave Pinterest a neutral or hold rating.
Last month, Pinterest went public at $19 per share and its shares went up 28% on its first day of trading. The company’s shares have remained mostly steady since its initial public offering in mid-April.
When Pinterest first went public, most analysts agreed the company’s shares were priced appropriately. However, its shares have risen 42% since going public and analysts are divided on whether this makes it priced to buy.
Pinterest is currently valued at $28 per share. Eight out of 10 analysts gave the company a neutral or hold rating with price targets ranging from $25 to $32 per share.
Mixed reactions to Pinterest’s stock
On Monday, Pinterest’s stock fell 8% after receiving mostly neutral and hold ratings from investors. For instance, Goldman Sachs was one of the main underwriters for Pinterest at its IPO.
This analyst said that while $19 per share was a good deal, it is currently overpriced. Credit Suisse did give the company a $34 price target but said Pinterest needs to increase its growth outside the U.S. to reach this target.
However, two analysts at Citigroup and Baird seemed much more optimistic about Pinterest’s potential. Citigroup gave Pinterest a $34 price target after touting the company’s ability to monetize pins. This analyst foresees Pinterest growing to a $5 billion a year company within the next five years.
An analyst from Baird gave Pinterest a $36 price target, saying the company could hit a billion dollars in revenue this year. The analyst pointed to Pinterest’s growing user base and ad business.
Are these reactions fair?
With a strong base of nearly 80 million monthly active users, Pinterest still has a lot of potential for future growth. Plus, the company’s unique value proposition gives it a huge opportunity to make money with advertising.
Ads on Pinterest aren’t seen as a nuisance the way they are on social media sites. Facebook users don’t usually log in planning to purchase items but the same can’t be said of Pinterest.
Pinterest isn’t about networking, it’s about looking for recipes, clothing ideas, ways to complete DIY projects, and more. In short, it’s about completing projects and getting things done. Often, these types of projects involve spending a certain amount of money.
If Pinterest can continue to grow its user base and monetization it should be well-positioned for future growth. This week, the company will release its first earnings report since going public which will give investors a better idea of what to expect.