After the failed takeover attempt by Paypal last year, the Pinterest share has continued its downtrend. After stumbling in the spring of 2021, the price plummeted May from the original high of over $90 to below $55. After a brief recovery at the end of July, the share price fell even more sharply. When the price had already fallen below $50, the takeover rumors caused a rise of over 30%. After that, the paper fell to $31 and currently stands at almost $33.
However, the company’s balance sheet is in good shape and could therefore be interesting for potential buyers. With a market capitalization of $21.3 billion and most recently reported revenue of $633 million in the third quarter of 2021, the P/E ratio is just 8.4. Even if the company were to show only moderate growth,
this should have been priced in by now. New company numbers on Feb. 10 are expected to show earnings of $0.45 per share, a huge increase from last quarter’s $0.28. Sales are also expected to have increased by nearly $200 million to $828 million.
After selling off more than 60%, Pinterest stock now appears to be a favorable opportunity.
The price/sales ratio and the price/earnings ratio now form a good fundamental starting position for further positive developments. Especially with the currently rather pessimistic market assessment of some investors regarding possible interest rate hikes by the FED, further price declines are possible, but in the long term, a good entry opportunity could also be offered now.
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