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What are the Pros and Cons of Pinterest Stock in 2020?

One of the most well-liked initial public offerings of 2019, Pinterest stock  (NYSE: PINS), began making good on the hype. After going vertical for several sessions after its debut, Pinterest stock subsequently became choppy, and a revenue miss combined with disappointing guidance during its third-quarter 2019 call quickly sank shares. But does that depression present a chance for investors?

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Personally, I’ve been skeptical about this stock. Although the underlying company is extremely relevant with the youth market, social media may be a very crowded sector. With Facebook (NASDAQ:FB), Twitter (NYSE:TWTR), Snap (NYSE:SNAP) et al. competing for attention, it’s hard to urge too excited about yet one more social media company.

On the flip side, this industry is notorious for producing slow starts. last , we only got to check out Snap’s IPO drama, which saw the corporate stumble out of the gate. But since late 2018, SNAP has been one among the top-performing stocks. It looks like Wall Street just needed a while to urge comfortable with the underlying business proposition.

So, do you have to gamble on Pinterest stock, especially given it still trades at a reduction relative to 2019 highs? Here are two pros and two cons to think about .

Pros: Pinterest stocks get benefited from Youthful Popularity

When it involves social media firms, eyeballs are everything. However, not all traffic sources have an equivalent level of desirability. a bit like traditional media companies targets the 18 to 49 demographic, social media companies have similar attitudes. The difference here is that Pinterest has gained serious traction with the young demo.

According to data from the Pew research facilitya good 34% of U.S. adults ages 18 to 29 use Pinterest. Additionally, 35% of these ages 30 to 49 use the platform. That beats out rivals Twitter (26%) and Snapchat (25%).

Critically, the usage of Pinterest stays nearly consistent between young adults and “young-ish” adults. This factor separates the platform from something like Snapchat, which is clearly geared toward youthful frivolities. As Snapchat users get older, they quickly abandon the app.

This also tells me that folks use the platform for reasons unrelated to age-defined behaviors. In other words, you’ll grow with Pinterest stock, which you can’t always say for other social-media related investments.

This also tells me that folks use the platform for reasons unrelated to age-defined behaviors. In other words, you’ll grow with Pinterest stock, which you can’t always say for other social-media related investments.

Pros: It attracts the Advertisers, Pinterest stock

Another interesting factor with positive implications for the stock is that the underlying platform’s attractiveness to educated users. In fact, between Pinterest, Twitter and Snap, the previous features the foremost educated user base.

Again, data from Pew indicates that 32% of Pinterest users have some college education, while 38% have college degrees. In both categories, the corporate beat its primary rivals by a conspicuous margin.

Combined with the consistent use across age groups, Pinterest also features a relatively wealthy user base. consistent with Pew, 34% of U.S. adult Pinterest users make between $50,000 to $74,999 a year, and 39% make $75,000 or more. Again, in both of those income brackets, PINS beats out Twitter and Snapchat.

As a result, corporate is extremely appealing to advertisers. Not only is that the app popular among key demographics, but those demographics also have the cash to plank on desirable goods.

Cons: 70%+ female Users

Speaking as a person, there are many instances where a heavily female-skewed audience is desirable. But with Pinterest stock, such gender imbalances represent a liability. Approximately 70% of the app’s users are women, which may be a huge problem.

As I stated above, social media is all about eyeballs. And while some eyeballs are more desirable than others, few companies can afford to be deliberately selective about their traffic. Now, the corporate has never began to be a female-oriented platform. But without greater male participation, the underlying company’s ultimate attractiveness to advertisers is necessarily limited.

To be fair, 50% of 2018’s new sign-ups on the platform were men. But even with more men joining the platform, social media forecasts indicate that the gender split won’t change appreciably from where it’s at today. Thus, while advertisers appreciate the income level of Pinterest users, the skewed user base may be a headwind.

Cons: Where’s the Beef

Not only does Pinterest stock suffer from imbalanced gender ratios, but I also don’t look after how the app is usually used.

In the U.S. market, the platform’s hottest category is art, art supplies and hobbies. As someone who dabbles in and supports the humanitiesI even have no problem with this intrinsically. However, this category just doesn’t usher in the large bucks. If you don’t believe me, consider the troubles some arts and crafts specialists have suffered within the past year.

Given that the company’s user base leans heavily female, I’m unsurprised that this category ranks tops on the platform. But what about the lads who use Pinterest?

Not surprisingly, the technology category is popular among the blokes, but so are food and drinks. This leads me to believe that Pinterest lacks traction with high-dollar industries. And that’s another concern because it relates to attracting advertisers.

The End Line of Pinterest stock

At its higher valuation last year, the pinterest stock was a simple sell. But at this relative discount, I can see why many of us have an interest in buying. At these prices, I’m not against taking a speculative bet. However, the company’s longer-term headwinds leave room for pause.

The initial price action of an IPO tends to be highly volatile. It’s a dangerous time for amateurs to trade the stock, in my opinion. A quick 20–30% sell-off over the first few days is NOT uncommon.

Essentially, if you buy immediately on the first hour of trading of a new IPO, you are simply making a huge gamble, in my personal opinion. I don’t touch IPO’s myself, and I would not recommend them to anyone. Trade a stock that is established and has a track record of performance and price behavior to work with.

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