Pinterest (NYSE: PINS) the stock does not work well. The company’s shares are down 30% this year alone and 40% over the past 12 months. This is partly due to the impact of taxes on Pinterest’s financial results. Last year, the social media giant’s earnings faltered as demand for ads on its platform from major retailers — hit hard by tough import duties — fell as they slashed marketing spending to cut costs and protect their margins. While this is a real problem for Pinterest, there are still very good reasons to buy the stock and hold it for the long term. Let’s consider three of them.
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The digital advertising market is competitive, with many social media websites and apps (and platforms outside of this niche) where marketers can target potential customers. Pinterest is not the biggest among them, but it has some advantages that set it apart. Pinterest offers a unique experience from many of its peers because of its visual focus. The company’s forum is not intended for breaking news, discussions, or debates on divisive issues. Instead, it helps spark the creativity of its users with a large library of images.
That also makes it a great ad platform. Pinterest users are on the website because they are doing some creative work and looking for inspiration. It can be from what outfit to put together to organizing a room, or planning a wedding — the bottom line is, they often need more than just inspiration. They also need to buy various things to turn their ideas into reality. That desire is one of the things that makes advertising on Pinterest attractive. The company’s focus means it can keep up with other social media giants.
Pinterest has a deep ecosystem of users that continues to grow, even as it weathers storms. The company ended the fourth quarter with 619 million active users (MAUs), a 12% year-over-year increase and an all-time record.
Pinterest has developed a network effect. More users on its platform mean a bigger library of images and more recommendations, helping to increase discovery, engagement, and ad sales. The cycle continues as the company’s deep content library and engagement helps it refine its recommendation algorithm. This is a great strength that can help Pinterest remain the leading platform in the social media industry for a long time.
Pinterest’s financial results for 2025 weren’t as strong as expected, but they weren’t entirely bad either. The company’s revenue increased 16% year over year to $4.2 billion, while adjusted income increased 22% to $1.1 billion. And most importantly, there are clear areas where Pinterest can improve over time. Consider the company’s average revenue per user (ARPU). This metric came in at $7.21 for the year, up 4% year over year. But here’s where it gets interesting: ARPU in the US and Canada was $30.84.
In Europe, it was $5.12, and for the rest of the world, it was just $0.83. The good news is that ARPU outside of North America has been growing very fast, and there is still a lot of opportunity here. As executives said in a third-quarter earnings conference call, they are now deploying the same strategy that made Pinterest so successful with US and Canadian advertisers to international territories.
Making progress within this underserved opportunity will help increase ARPU and sales over time. What about Pinterest fees? This situation is constantly changing and evolving, but my view is that once things stabilize, Pinterest’s ad business will rebound as marketers increase sales revenue again. Currently, the company is increasingly targeting small and medium-sized advertisers while using artificial intelligence-based tools on its platform to improve engagement and improve its ad delivery platform for businesses. So, Pinterest’s prospects remain bright, and the stock looks attractive after significantly lagging the market last year.
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Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool ranks and recommends Pinterest. The Motley Fool has a policy of disclosure.
3 Reasons to Buy Pinterest Stock Like There’s No Tomorrow was originally published by The Motley Fool
