Pinterest (NYSE:PINS)

pinterest is the fastest growing social network this year: however, we are only at the beginning. strong user growth make the title a must buy. moreover, the company has managed to fit into a truly high-growth space with a secular trend, without the contradictions in terms of privacy and therefore without major obstacles related to antitrust issues. The social media segment from e-commerce and advertising finds a valid synthesis point in this company. triple-digit growth is likely over the next 5 years.

On Pinterest, consumers browse inspiring images
to discover what they want to buy, find products related to these inspiring scenes and purchase from verified merchants. A complimentary business model to the traditional direct to consumer e-commerce model with significantly lower customer acquisition costs makes Pinterest a compelling e-commerce partner. The recent Shopify integration and addition of a Shop tab feature will fuel shopping volume as consumers to continue to favor the ease of point-and-click online consumption.

MAU's were 416 million in Q220, up 39%, and now eclipse Twitter. Growth was driven both domestically and more so abroad, which is important to note as the former generates much high ARPU. Strong top-line growth, 60% gross margins and decreasing SBC, Sales and Marketing and R&D costs make a case for material profitability within the next several years. With $1.7 billion in cash, cash equivalents and marketable securities, no debt, and positive cash from operations in the most recent quarter, the company is in a strong position to continue to reinvest in growth. We expect ARPU to improve as management's targeted international advertising strategy becomes more efficient over time, and advertising demands returns post COVID-19.

The stock isn't cheap at 16x P/S, but with a unique discovery model, high gross margins and robust balance sheet, we expect Pinterest to be able sustain double-digit MAU's growth, achieve meaningful ARPU improvement and material EPS growth over the next several years.