Every investor should have an investing thesis for why they bought a stock. Here's mine for Pinterest (NYSE:PINS), which I bought for the first time earlier this year.

Social networking, e-commerce, and digital advertising are all long-established trends, and Pinterest stands to benefit from all of them. Pinterest users gravitate toward the platform because it's more inspirational and apolitical than others, and I expect the company still has plenty of room to grow its user base from here. Plus, by rolling out new monetization features, I believe Pinterest can rapidly grow its revenue and become a multibagger stock over the next decade.

That's my bullish thesis, and recent developments confirm it. Here are three reasons to buy Pinterest stock.

A keyboard has a large red button that says buy now.

Image source: Getty Images.

1. A growing user base

Pinterest defines monthly active users (MAU) as people accessing or interacting with the platform at least once in a calendar month. In the second quarter of 2020, Pinterest grew MAU both internationally and domestically. Globally, MAU surged 39% year over year to 416 million.

CEO Ben Silbermann explained the surge in user growth during July's second-quarter earnings call, saying, "users came looking for ideas as they adjusted to life during a global pandemic." He also said people were looking for "everything from home office setups to recipes to cook at home to different summer activities for kids."

In the first quarter, global MAU was only up 26%. So Pinterest didn't only show good growth in Q2, growth accelerated. In fact, Q2 was its fastest growth since going public. This is important because without users, Pinterest can't monetize the platform. But as long as users are there, the opportunity exists for profit.

While very different platforms, consider Facebook has over 3 billion people using its services. And even TikTok has over 1 billion users, according to Wallaroo Media. Given the scale of other platforms and its own accelerated user growth, I expect Pinterest's user base to double or even triple over the next decade. 

Two phone screens displaying shopping options on Pinterest.

Pinterest is facilitating more e-commerce. Image source: Pinterest.

2. New use cases

If this were just about saving pictures, then Pinterest would be a less exciting business. But increasingly, the platform is developing new use cases to drive value for both users and businesses. Specifically, Pinterest recently partnered with Shopify to bring product catalogs into the experience in a native way. 

It makes perfect sense. When users peruse Pinterest, they're often looking for inspiration for their own projects. Chances are high they're in a frame of mind to make a purchase. So long as the company pursues this feature in a non-spammy way, it provides value. 

Long-term, Pinterest can be a unique e-commerce experience, and it's already gaining traction. In Q2, product-only searches were up eight times from last year.

A faucet dispenses coins on to a pile of coins on a plate.

Image source: Getty Images.

3. Improving monetization

In Q2, Pinterest's revenue was only up 4% year over year. This suggests its user monetization, known as average revenue per user (ARPU), is deteriorating. And on the surface that's true. Globally, its ARPU was a paltry $0.70, down 21% year over year.

This global ARPU decline masked Pinterest's progress in international markets. International ARPU was up 21% in Q2. It was only $0.14 per user, but consider the company is still very early in its journey there. In many countries, it's actively educating businesses on how its platform can be used to reach new customers. This will take time, but Pinterest showed marked growth even during a quarter impacted by the pandemic.

Pinterest's monetization decline is solely attributable to the U.S. where companies significantly pulled back on ad spending in Q2. This is a logical business move in the short term. After all, the coronavirus caused sweeping changes overnight, leaving companies unsure how consumers would respond. Best to save cash and wait to see what happens.

Longer-term, retail companies must advertise and Pinterest is demonstrating the returns it can offer. In its Q2 letter to shareholders, management provided an example from a company called MVMT Watches. Because of improvements to the platform, MVMT Watches' cost per customer acquisition on Pinterest was four times lower than normal advertising. Assuming this is more than anecdotal, Pinterest is demonstrating its value proposition to advertisers.

And I suspect that's the case. After the initial coronavirus shock, economic activity normalized and advertisers resumed spending. In July, after Q2 finished, Pinterest's revenue was up a stunning 50% year over year. It expects that surge to mitigate somewhat, but it still hopes to report 30% revenue growth in the upcoming third quarter.

These three points from Q2 affirm my bullish thesis in this growth stock. Since the thesis is playing out, I'm considering buying more shares as soon as The Motley Fool's disclosure rules allow.