Have you been suffering from the quarantine blues? Have you been forced to work at home? Have the kids been bothering you more now that you’re at home?
Chances are then, you’ve thought of customizing your house/workspace to deal with working from home. Or maybe you really like working from home and are using it as an excuse to renovate the whole space. If you are in this specific camp, chances are you have used the service the stock of the week offers: Pinterest.
Pinterest is an online service that enables you to collate photos from all around the world and search based on the photos you save/search up. It’s simplicity sits on top of a complex algorithm, which, like many online websites, displays ads along with it. The genius of Pinterest is that its ads blend in nicely with the content they are showing you. For example,
Can you see the ad? Okay, of course, you could – you were looking for it. However, I am an avid user of Pinterest, and trust me when I say their advertising is effective and blends in really well. Many will be surprised to know that Pinterest is the third most used social media in the United States, just behind Facebook and Youtube.
Pinterest is definitely a stock that benefits from people working/staying at home more during quarantine. In short, due to quarantine, people have been staying at home longer, which incentivizes them to make their “space” just that bit more special to live in. Such a simple reason for an increase in usage, however, an effective one. The stock has nearly doubled in the past year, with revenues surging 58% from a year ago with their monthly active users at 442 million vs. an estimated 436.38 Million estimated.
Furthermore, digital consulting firm Avionos stated that media sites like Pinterest had been a popular advertising tool for brick and mortar retailers as it provides them with a more pleasing way to advertise their products.
This is around the time I say that the risk is its valuation – however, the stock is in its early stages, having only IPO’s in the middle of last year. With that said, the stock price today is at an all-time high. The main risk for Pinterest is also its main attraction - users going to the site for inspiration. Once they get their inspiration, the risk for Pinterest is that they stop using the site, creating a churn and burn type business.
Despite its risks, I believe that Pinterest has a strong user base that uses it to draw inspiration and imagine how their future may be with the thing they’re looking for. Furthermore, their advertising methods may prove effective when trying to convert users into purchasing their goods.