What happened

Shares of Pinterest (NYSE:PINS) pulled back by as much as 5% today, despite getting a price target increase from Wall Street. Piper Sandler reiterated a neutral rating on the stock while analyst Thomas Champion adjusted his price target from $70 to $85, which represents a mere 4% upside from Friday's closing price. The stock had reached an all-time high of $86.49 on Friday. Pinterest shares closed today down 3%.

So what

Pinterest stock surged to all-time highs last week after reporting fourth-quarter results that showed meaningful progress in improving monetization. Average revenue per user (ARPU) in the U.S. increased 49% to $5.94, while international ARPU jumped 67% to $0.35. The fourth quarter figures were "strong," in Champion's view.

Person using Pinterest app on an iPad

Image source: Pinterest.

Piper Sandler initiated coverage of Pinterest a few weeks ago, with the analyst expressing some concerns that the business is so heavily concentrated in the U.S. Approximately 84% of revenue was generated in the U.S., despite the fact that only 21% of monthly average users are in the U.S. The neutral rating is based in part on Champion's belief that the stock is fully valued after gaining over 250% in 2020.

Now what

Improving international ARPU is core to the bullish thesis for Pinterest, and the company says that monetization abroad remains in "the early stages." The social media technology company is forecasting first-quarter revenue growth in the low 70% range, which could represent minor deceleration compared to the 76% growth it posted for the fourth quarter.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.