Pinterest (PINS -0.41%) reported third-quarter earnings after the market closed on Wednesday. The company reported revenue growth of 58% year over year -- a sharp acceleration from the mere 4% growth it reported in the second quarter. But Pinterest management believes its business is still speeding up. For the fourth quarter of 2020, management is guiding for 60% year-over-year revenue growth.
Last quarter, Pinterest was hurt by the COVID-19 pandemic. The company's revenue is generated by advertising, and advertisers cut back on spending in the early days of the coronavirus shutdowns. However, Pinterest's business was already improving by July. Management noted that through July 29, Q3 revenue was up 50%.
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Despite the strong growth in July, Pinterest management was cautious with its outlook. It guided for Q3 revenue growth in the "mid-30% range," uncertain whether trends would carry forward. But as CFO Todd Morgenfeld said in today's release, "The strong momentum our business experienced in July continued throughout the rest of the third quarter."
In the conference call, Pinterest management mentioned unknowns for Q4. In Q3, the company benefited from advertisers boycotting other social media platforms. But it's unclear if that benefit will carry forward into Q4. Furthermore, the ongoing coronavirus could impact holiday spending and advertising demand. Notwithstanding these unknowns, it appears the business for this growth stock has momentum going through the remainder of 2020.
Immediately following the press release, Pinterest stock was up over 20% in after-hours trading.
