PINS Rides on Strength in Ad Business: Will the Trend Continue?

Pinterest, Inc. PINS is increasingly establishing a unique value proposition to advertisers that could provide a competitive advantage in the long haul. Through various innovations, it continues to dramatically improve the advertising platform.

The company is witnessing healthy momentum in the retail sector, coupled with growing traction in some emerging markets, such as financial services, technology and entertainment, which are driving growth. 

Pinterest’s effort to bridge the gap between upper-funnel storytelling and inspiration to lower-funnel conversion is improving campaign performance. The company is constantly integrating AI to boost personalization and efficiency of the ads it shows to users. The AI-powered Pinterest Performance+ suite has gained strong market traction among advertisers worldwide. These factors are driving click-through and conversion rates, leading to a sustained return on investment for advertisers.

Management's decision to increase the accessibility of the mobile deep linking (MDL) product to more advertisers has improved shoppability on the platform. The MDL solution is well-suited for retailers who are aiming to drive more purchases through their mobile app. This has significantly boosted shopping ads revenue generation. Direct Link product is gaining strong popularity among advertisers and retailers.

In the second quarter, Pinterest’s ad impressions grew 55%. Ad pricing declined 25% in the second quarter, as the company continues to expand into unmonetized international markets where ad pricing is generally low compared to highly priced markets of the United States and Europe.

How Are Competitors Faring?

Pinterest faces competition from Meta Platforms, Inc. META and Snap, Inc. SNAP in the social Commerce space. Meta has been taking several strategic initiatives, including AI integration to boost engagement and drive better ad conversion rates across its platform. META’s new AI-powered recommendation model for ads drove roughly 5% more ad conversions on Instagram and 3% on Facebook in the second quarter of 2025.

Despite efforts to diversify its revenue stream, advertising remains a major source of revenue for Snap. Integrated with improved AI capabilities and optimization tools, Snap’s advertising platform demonstrated major performance improvement in the second quarter. The company's Sponsored Snaps format drove incremental conversions during Q2.

PINS’ Price Performance, Valuation and Estimates

Pinterest has gained 17.6% over the past year compared with the industry’s growth of 39.6%.

From a valuation standpoint, Pinterest trades at a forward price-to-sales ratio of 5.22, below the industry.

The Zacks Consensus Estimate for Pinterest’s earnings for 2025 has decreased over the past 60 days.

Pinterest currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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