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Why Did Pinterest Rise on Friday Despite the Tech Sector's Weakness?

By Matthew Frankel, CFP® – Oct 1, 2021 at 2:39PM

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The social media stock got a nice boost to start the fourth quarter.

What happened

The stock market was having an upbeat day on Friday, with all three major indices in the green as of 2 p.m. EDT. However, the tech-heavy Nasdaq was the laggard of the three, up by just 0.3% versus gains of more than 1% for the Dow Jones Industrial Average and S&P 500.

Despite the relative weakness in the tech sector, social media stock Pinterest (PINS -2.81%) was surging to start the fourth quarter, with shares rising as much as 6% during the trading session. As of 2 p.m. EDT, its shares were up by about 3.5%.

Man using laptop and smiling.

Image source: Getty Images.

So what

The short explanation behind Friday's move is that an analyst gave the stock some help. An analyst at RBC Capital initiated coverage on Pinterest with a sector perform rating, which is essentially neutral, but with a $58 price target, implying about 10% upside even after Friday's pop.

The analyst cited Pinterest's improved monetization, but expressed reservations about the stagnant U.S. user growth the company reported in the second quarter.

Now what

To be sure, we tend to take analysts' opinions with a big grain of salt, and this one wasn't exactly a glowing endorsement of Pinterest. However, after two straight quarters of disappointing results and concerns that it could be tough for the social media company to keep growing its user base as the consumer behavior gets back to something more like its pre-pandemic normal, a $58 price target despite the headwinds facing the company seems to be music to the ears of Pinterest's shareholders.

Matthew Frankel, CFP owns shares of Pinterest. The Motley Fool owns shares of and recommends Pinterest. The Motley Fool has a disclosure policy.

Stocks Mentioned

Pinterest Stock Quote
Pinterest
PINS
$24.86 (-2.81%) $0.72

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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