Meta Platforms (META -4.13%) and Pinterest (PINS -1.55%) found themselves moving in different directions following earnings. Meta again disappointed as revenue stagnated and investors soured on its metaverse strategy. In contrast, Pinterest has delivered modest improvements amid its changed leadership and a new approach.

However, the Facebook parent continues to dominate social media, and its earnings multiple has taken it deep into value stock territory. The question for investors is whether those factors make Meta a better choice over a much smaller social media company returning to growth mode.

Pinterest moves forward under new leadership

Pinterest stands out by allowing users to pin items based on their interests. In effect, this tells Pinterest their passions, allowing marketers to reach these users on an individual level through promoted pins.

Like other social media stocks, Pinterest prospered during the pandemic, attracting more monthly active users (MAUs) and massive revenue growth. While the company's MAUs have since stagnated in recent quarters, its average revenue per user (ARPU) improved over the last two quarters (except for in Europe). Diving a bit deeper into the details, ARPU improved by 1% globally quarter over quarter and U.S. & Canadian ARPU surged higher by 5% over the same period.

Pinterest Monthly Active Users (MAUs) and Average Revenue Per User (ARPU) by Quarter
  Q4 2021 Q1 2022 Q2 2022 Q3 2022
MAUs 431 million 433 million 433 million 445 million
ARPU -- Global $1.93 $1.33 $1.54 $1.56
ARPU -- U.S. & Canada $7.17 $4.98 $5.82 $6.13
ARPU -- Europe $1.10 $0.72 $0.86 $0.72
ARPU -- Rest of World $0.11 $0.08 $0.10 $0.11 

Data source: Pinterest Investor Relations

However, the end of lockdowns reduced MAUs, a factor that culminated in co-founder Ben Silbermann stepping down as CEO. Under new CEO Bill Ready, Pinterest has pivoted to a more e-commerce-oriented direction, and the early results appear promising.

In the third quarter, revenue grew 8% to $685 million. Although MAUs of 445 million were flat year over year, it also points to recovery on a sequential basis. Also, management expects the growth to continue in the fourth quarter, a factor that probably led to the stock's increase in Friday trading, the day after the earnings release.

Still, Pinterest has a long way to go. The $65 million loss in the third quarter stands in contrast to the $95 million in earnings in the year-ago quarter. Also, its price-to-earnings ratio shot above 350 as losses in the three quarters of this year negated most of the profit from the fourth quarter of last year. However, it's important to consider that such an occurrence likely makes the P/E ratio a poor judge of its valuation.

Finally, compared to Meta, its price-to-sales (P/S) ratio of 6 -- a measure of its revenue per share versus the stock price -- is substantially higher than Meta's P/S ratio, making it the more expensive of the two stocks.

With that said, let's take a closer look at what has been happening with Meta Platforms lately. From there, we can determine which is the better social media stock to buy now.

Meta changes direction to live up to its new name

Meta sells at a P/S ratio of 2, and its P/E ratio of 9 is an all-time low. Investors should consider these factors important given Meta's dominance in the social media sphere. More than 3.7 billion people use a Meta-owned site every month -- a level unmatched by Pinterest or any other social media peer.

However, Meta faces a challenge with global saturation: Over 45% of the world's population is on at least one of its sites. To address growth concerns, Meta pivoted into the metaverse, going so far as to change the company's name to fit this strategy.

Nonetheless, investors do not seem to share CEO Mark Zuckerberg's enthusiasm for the metaverse. In the third quarter, Meta reported revenue of $27.7 billion, a 5% decline from 12 months ago.Meta's $4.4 billion net income dropped 52% over the same period. A 45% increase in research and development spending, heavily related to the metaverse, seemed like a red flag for Meta Platforms' future. The stock fell more than 25% in the following session.

Additionally, the company revised fourth-quarter revenue guidance down to the $30 billion to $32.5 billion range. This leaves investors with little hope that its considerable metaverse investments will pay off quickly. Still, analysts forecast revenue growth will come in at 6% next year. That could make Meta's aforementioned P/E ratio of 9 seem inexpensive in time.

Pinterest or Meta Platforms?

As conditions stand now, new investors should probably lean toward Pinterest. Admittedly, it does not have Meta's massive user base or low valuation, but Ready's early success indicates Pinterest has a viable plan to better monetize its site. Moreover, improving ARPU numbers appear to bode well for the company.

Conditions continue to change, and if Meta can show signs of success in the metaverse, investors should revisit this question. But if choosing between the two companies today, investors should consider pinning Pinterest stock.