• Brett Schafer

Deep Dive: Pinterest

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  1. What do they do? Pinterest is a social platform that helps people find inspiration for different lifestyle events like weddings, vacations, and decorating.

  2. History? Pinterest was founded in 2010 by Ben Silbermann, Evan Sharp, and Paul Sciarra.

  3. Industry? They operate within the social media, but increasingly also the social commerce and e-commerce industries. Competitors include Facebook and possibly (?) Etsy, but the market opportunity is quite large and well known.

  4. Management? Founder Ben Silbermann is still the CEO. Melvin Capital actually owns 1.5% of the stock (shout out).

  5. Valuation? (As of recording) P/S of 26.6, P/GP of 36.4, unprofitable but getting close to break-even.

  6. Earnings? $1.7B in 2020 revenue, up 48% YoY. ARPU grew 29% in the fourth quarter.

  7. Balance Sheet? $1.8 billion in cash and the only debt outstanding are lease liabilities. Nothing concerning at all here.

  8. Potential Competitive Advantages? We had network effects, the lock-in of search-based products, and the different nature of Pinterest than other social networks.

  9. Future Growth Opportunities? VSCO acquisition, e-commerce initiatives, and international expansion were opportunities we identified.

  10. Highlights? A remarkable track record of growth, e-commerce stuff, and a clear path to sustained sales growth were highlights we had.

  11. Lowlights? Social commerce is highly competitive, really high stock comp, and a lot of parties to make happy were lowlights we thought could hurt Pinterest.

*Chit Chat Money is sponsored by 7investing. Use our link or enter promo code “CCM” at check-out to get $10 off your first month of the service.

Disclosure: The authors and podcast guests are not financial advisors. Brett Schafer and Ryan Henderson are portfolio managers at Arch Capital. Clients of Arch Capital may hold securities discussed on this podcast.

#PINS #Pinterest

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