Shares of Pinterest (NYSE:PINS) rose 253.5% in 2020, according to data from YCharts -- a surge driven by the social media company's impressive engagement and monetization performance.
While the coronavirus pandemic created headwinds for many industries, it provided positive catalysts for many social media companies. Pinterest was among the biggest beneficiaries, and the use of its platform for sharing images, short videos, and other media grew dramatically as people sought ways to stay in touch that were compatible with social distancing.
Pinterest beat analysts' earnings targets with each of the four quarterly reports that it published in 2020, and its strong revenue growth reflected the rapidly expanding adoption of its social media platform.
The company delivered a blockbuster third-quarter report in October, with sales growing 58% year over year and double-digit percentage user growth in all major geographic territories. Total monthly active users in Q3 surged 37% compared to the prior-year period, reaching 442 million.
Strong engagement growth helped boost digital ad sales and online retail participation on the platform, and it looks like this growth phase for Pinterest could just be getting started. In many ways, the platform is a natural fit for e-commerce promotions and integration, and support from Shopify, IKEA, and a growing number of small businesses evidences the additive potential that it offers to retailers.
Pinterest's growth engines have never looked more promising, and its impressive momentum looks poised to continue. Management anticipates that it will report that sales grew roughly 60% year over year in the fourth quarter. The company is seeing strong growth in markets outside of the U.S., where there's still huge room for expansion as the company builds out its user base and benefits from the growth of the global middle class.
With a market capitalization of roughly $40.7 billion, Pinterest is valued at roughly 103 times this year's expected earnings and 17 times expected sales.