What happened

Shares of Pinterest (PINS 0.51%) were tracking modestly higher on Friday after peer social-media platform Snap (SNAP -0.83%) reported positive earnings results. At 10:30 a.m. EST, Pinterest stock was up 3% but had traded 5% higher earlier in the session.

So what

While Pinterest and Snap's Snapchat are two drastically different platforms, they generate revenue in the same way: displaying ads. Therefore, Snap's strong results suggest the ad environment is generally healthy, which bodes well for Pinterest as it prepares to report its financial results next week on April 27.

A hand plots an arrow higher on a graph.

Image source: Getty Images.

Snap's quarterly revenue was up an impressive 66% year over year to $770 million. Moreover, demand for its ad slots remains strong. On the conference call to discuss results, management said, "The amount of money committed via upfronts for 2021 is already more than 50% above the total upfront commitments made in 2020." Some of this is probably due to an increase in advertising budgets compared to last year. But give Snap credit -- its own platform has meaningfully improved and has earned more advertising dollars.

Now what

Wall Street is more bullish on Pinterest following Snap's financial results because its ad business is likely seeing strong demand as well. But Wall Street was already pretty bullish on the stock before today. According to MarketWatch, the average analyst price target for Pinterest stock is currently $89.88 per share, implying roughly 20% more upside from here. Some are even more optimistic. Just yesterday, LightShed Partners put a $100-per-share price target on Pinterest stock, according to The Fly. 

Of course, when reading analyst opinions like this, it's important to keep a couple of things in mind. First, though these analysts see upside, they could be wrong, and you should still do your own due diligence. Second, most analysts are looking at the stock only for the next year. But buy-and-hold investing (which I advocate) has a much longer time horizon in mind.