Amid the market downturn, many companies that investors thought were “high-growth stocks” lost most of their value. two of these, Pinterest (pins 6.50%) And year (public 11.82%)has fallen more than 75% from its highs in 2021.
However, recent earnings reports are showing signs of excessive growth in their financials. Once market sentiment turns positive, big increases can turn into gains for technology stocks that are growing.
Pinterest’s stock price, previously high during the pandemic, has been steadily declining in value over the past 15 months as users return to more offline activities. This trend has translated into a decrease in the numbers of monthly active users (MAUs). But after declining for three straight quarters, first-quarter results from Pinterest showed median average performances of 433 million. While this still represents a year over year decline, it rose sequentially from 431 million in the fourth quarter.
However, this low usage hasn’t eliminated Pinterest’s advantage with advertisers. Users turn to Pinterest for ideas, which gives it an advantage over other sites that have to rely more on general demographic and psychological profiles not designed for individuals.
However, like other companies that rely on online activity, Pinterest has suffered from slower revenue growth. Revenue increases did not match the 52% growth in 2021. However, in the first quarter, the company increased revenue 18% year over year to $575 million.
Pinterest accomplished this even with the slow MAU numbers because it reaped more revenue from its customer base. Global average revenue per user (ARPU) was $1.33, up 28% from last year. The company also reduced its losses to 5 million dollars, compared to 22 million dollars for the quarter of last year. Slower cost and expense growth offset higher income tax expenses and lower interest income.
Admittedly, users may have to be patient to wait for growth to return. For the second quarter, the company expects revenue growth of 11%. It also expects operating expenses to grow 35% to 40% as it makes content investments in its ecosystem.
However, amid slow expectations, the stock became a bargain. The price-to-sales (P/S) ratio has fallen to 5.3, near an all-time low. This makes it cheaper than Explode, Explode Approximately 8.7 times sales and slightly more expensive than ID pads, which maintains a P/S ratio of 4.6. This low complication could indicate an opportunity for Pinterest as MAU levels continue to recover.
Roku has set itself to grow simply because it has made itself the future of television. Consumers continue to switch from broadcast and cable TV to streaming platforms. Roku has positioned itself at the center of this trend with its ecosystem. It attracts viewers with its low-cost televisions and streaming players. In addition, the biggest driver of growth is the advertising platform through which companies can reach this audience.
According to eMarketer, only 18% of ad budgets go to broadcasting. However, as the transition to streaming continues, Roku will likely benefit as that percentage approaches 100%.
Roku’s investment thesis remains sound. The number of active accounts increased to just over 61 million, an increase of more than 1 million from the previous quarter.
Total net revenue was $734 million, an increase of 28% year-over-year. The platform-driven segment reached $647 million, up 39% over the same period. It also made up for a 12% drop in player revenue driven by supply chain issues. During this time, the prices of TVs increased while the prices of gamers fell on average by 9%.
However, cost of revenue and operating expenses increased faster than revenue. This resulted in a net loss of $26 million, well below the $76 million that was realized in the quarter last year.
Amid the decline, revenue growth is expected to slow, with the company forecasting net revenue of $805 million, an increase of 25%. This represents a significant slowdown from the second quarter of 2021 when net revenue was up 81% compared to the second quarter of 2020.
However, the drop in the stock price has brought the price-to-price ratio down to 4.5. Over time, investors can begin to see this valuation inexpensively as the move to streaming continues to drive revenue and increase users.