Pinterest (NYSE:PINS) stock has not been a market favorite for most of 2021. The image-based social media platform gained a surge of interest and new user signups at the onset of the pandemic in 2020 when folks were cooped up indoors for long periods. But the stock has had trouble matching 2020's performance in 2021 and is off about 15% year to date.

With 2021's introduction of vaccines against COVID-19 and the populace feeling more confident leaving their homes, the increase in consumer mobility has had mixed effects on Pinterest's business. That has caused some volatility in its share price and, perhaps, an opportunity for long-term investors.

Let's look at three reasons to buy the stock and one reason for concern. 

A person sitting and looking at their cell phone while a dog sits on their lap.

Image source: Getty Images.

1. Pinterest's average revenue per user is rising

Pinterest is free for consumers to join and use. The company makes a profit by selling advertisements. Therefore, one of the company's more critical metrics with investors is its average revenue per user (ARPU). This is essentially how much revenue the company generates from each user. Pinterest can increase overall revenue by either increasing ARPU, increasing users, or both. 

The company lost 24 million monthly active users in its most recent quarter due to reopening economies and increasing consumer mobility. But fortunately, the same trends causing the company to lose monthly active users is causing an increase in average revenue per user. Businesses are reopening, and they need to get the word out that they are open for business.

Further, companies that paused advertising campaigns at the pandemic's onset are now resuming spending. The convergence of these factors led Pinterest to report an 89% increase in its ARPU from the same quarter last year.

What's more, the metric has room to grow as the company is still in the early stages of developing international revenue streams. A wide gap between its international ARPU ($0.36) and U.S. ARPU ($5.08) can be closed as it builds its global capabilities.

2. Pinterest is immune to supply chain challenges

One of the side effects of the coronavirus pandemic is the broad supply chain disruptions. Shortages of everything from commodities to labor to shipping containers are widespread and causing an increase in prices throughout the economy. That's increasing costs for several businesses and has the potential to pinch their profit margins. Further, supply chain shortages are hurting companies that rely on selling physical goods because it limits their quantities. 

Fortunately for Pinterest, it is nearly immune to supply chain issues. Since it is a digitally native business, it is not constrained by supply shortages. Moreover, as prices increase throughout the economy, it increases the fees Pinterest can charge for advertising. Indeed, in its most recent quarter, Pinterest noted that the advertising price increased by 83%.

3. Pinterest has a favorable valuation 

The fall in Pinterest's monthly active users is making the market nervous. The increased risk of not knowing how far the drop will go has caused the stock price to trade at a relatively inexpensive valuation. 

A chart showing Pinterest's price to sales ratio.

Data by Ycharts.

Pinterest is trading at a price-to-sales ratio of 15, nearly half of the price it was selling for earlier in the year (see chart). 

One reason for hesitation 

Still, there is reason to hesitate as you consider whether to buy Pinterest stock. As mentioned, the company did lose 24 million monthly active users in its most recent quarter. It's too soon to tell yet whether the user total will continue to trend downward.

Investors concerned about this drop in users might want to consider waiting at least another quarter to see if the company reports a turnaround on user totals before making the jump to accumulate shares. Then again, if a turnaround does come, then buying now means getting the stock at a discount as investors rush back in. At the very least it needs to be factored into any investing calculations you do make.

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.