My stock portfolio isn't terribly concentrated, and the "largest" stock investment in it has changed a few times over the past couple of years thanks to price movements. Upon logging into my brokerage account about a week ago, I found that it has changed again: Social media company Pinterest (PINS 0.65%) is now the largest stock investment in my portfolio.
To be sure, I didn't necessarily plan on Pinterest becoming my largest stock investment when I bought it. But I bought most of my position at roughly $15 per share during the initial COVID-19 market crash when it looked absurdly cheap, and I bought what I would consider a large position at the time. The stock is up by about 170% four years later, and after its recent post-earnings pop, is now my largest individual stock investment.
Although Pinterest has performed exceptionally well in my portfolio, I have absolutely no intention of selling any of it anytime soon. Not only does it still represent a comfortable percentage of my total assets (about 10% of my stock portfolio), but it's generally not a good idea to sell just because a stock went up as long as your investment thesis still applies. And I feel that Pinterest is an even stronger business today than when I bought it.
Strong first-quarter numbers
As mentioned, Pinterest stock spiked after its first quarter numbers were released, and it isn't hard to see why. Thanks to a combination of unexpectedly strong user growth and monetization, Pinterest's revenue grew by 23% year over year, its fastest growth rate since 2021, when it was still benefiting from the pandemic-era tailwinds.
The monthly active user (MAU) base was the biggest surprise, reaching 518 million (a new all-time high), which is 12% more than there was a year ago – not to mention stronger user growth than the rest of the social media industry. Pinterest's focus on e-commerce tools and incorporating artificial intelligence (AI) into its user experience seems to be paying off nicely.
Tons of room to grow
Pinterest could still be in the early stages of its growth story, especially when it comes to its international users. Fewer than 19% of its users are in the U.S. and Canada, yet this segment accounts for 80% of its revenue. The average U.S./Canada user generated $6.05 in revenue for Pinterest in the first quarter. Meanwhile, the average European user produced just $0.86, while the 279 million active users in the rest of the world accounted for just $0.11 on average.
It's difficult to overstate what a massive opportunity Pinterest has when it comes to monetizing its international users. The company is likely never going to generate quite as much revenue from its international users, but if it could start to narrow the gap, it would be a big win.
In addition, Pinterest could certainly keep its user growth momentum alive for some time. For comparison, it has roughly one-sixth the active users of Meta Platforms' Facebook. While I don't think it will reach 3 billion-plus users anytime soon, the user base could conceivably double over the next five years or so if Pinterest can maintain its current growth rate.
Finally, Pinterest is doing an excellent job of controlling expenses as revenue grows, and as the business continues to scale, this should translate to improving bottom-line profitability.
I'm not selling a share
To sum it up, although Pinterest stock has performed remarkably well, I believe the performance is well-justified by its business results. The progress since CEO Bill Ready took over has been impressive. I'm excited to watch the next chapters of the growth story unfold -- so I don't plan to sell a single share.
