What happened
The stock market was essentially flat shortly after the opening bell Friday, with all three major averages up or down by 0.2% or less as of 9:50 a.m. ET. However, Pinterest (PINS -0.22%) was a big outperformer, with shares up by 8% in volatile trading.
So what
The short explanation is that Pinterest reported fourth-quarter earnings that investors were very happy with. In fact, the stock was up by 25% in Thursday's after-hours session before cooling off.
Image source: Getty Images.
Pinterest handily exceeded expectations on both the top and bottom lines, but that's not what is the big driver behind today's move. In a nutshell, after Meta Platforms' (META 2.33%) disappointing earnings on Wednesday, investors were worried that inflation and advertising industry issues would weigh on the entire social media subsector.
With Pinterest, this doesn't appear to be the case. The company projected first-quarter revenue growth in the "high teens," which is in line with what analysts had been expecting.
Beyond that, Pinterest announced that although its active user base declined for the third consecutive quarter, it had started to rebound, with the active user count on Feb. 1 about 6 million higher than at the end of 2021. Monetization was also impressive, with average revenue per user (ARPU) up 23% from a year ago, with especially strong 62% growth in international ARPU.
Now what
In simple terms, Pinterest showed investors that Facebook's major issues are company-specific and that its business is growing as expected or better. Investors are breathing a sigh of relief today, and if user engagement and monetization trend in the right direction for the rest of 2022, there could be much more upside ahead.
