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Why Pinterest Stock Jumped Wednesday Morning

By Daniel Sparks – Updated Dec 22, 2021 at 9:47AM

Key Points

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Shares of the tech company have been slammed this year. Is the low stock price attracting the attention of activist investors?

What happened

Shares of visual and search social media company Pinterest (PINS -0.51%) popped on Wednesday, rising as much as 5%. As of 12:05 p.m. ET, however, the stock was up about 2%.

The stock's gain comes amid an upbeat day for the overall stock market, with many tech stocks like Pinterest seeing outsized gains. The move interestingly occurred even as Citi lowered its price target on the stock.

A woman browsing Pinterest on a tablet.

Image source: Pinterest.

So what

Citi analyst Jason Bazinet raised a yellow flag for Pinterest shares on Wednesday and lowered their price target to $42 -- down from $48 previously. The analyst maintained a neutral rating on shares. While Bazinet's price target is lower, it's notably above the stock's price of just over $37 at the time of this writing. Perhaps this explains why the lowered target may still draw attention to the stock.

In addition, there have been rumors of activist investor talks related to the company.

But it's likely the optimism in the overall market that is the primary driver of the stock on Wednesday. As of this writing, the S&P 500 is up 0.7% and the tech-heavy Nasdaq Composite is up about 0.9%.

Now what

Pinterest stock has had a rough year. Shares are down 43% year to date, even as the S&P 500 has gained nearly 25%. Some investors may see the dramatic fall in the stock as a buying opportunity.

The holiday quarter will be key for Pinterest. Not only is it usually the company's biggest quarter in terms of revenue, but it comes at a time when the company has been facing headwinds in some geographies with its user engagement metrics.

Regarding the rumors of activist investor chatter, it would likely be wise to refrain from trading on this, as there's no concrete information available to base investment decisions on.

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Daniel Sparks has no position in any of the stocks mentioned. His clients may own shares of the companies mentioned. The Motley Fool owns and recommends Pinterest. The Motley Fool has a disclosure policy.

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