Does Pinterest’s Recent 20% Drop Signal a Real Opportunity for Investors in 2025?

• Wondering whether Pinterest stock is truly a bargain or just catching your eye? Let’s dig into what the numbers and recent market sentiment are revealing so you can decide with confidence.
• Pinterest's share price has seen some notable movement lately, falling 5.8% in the past week and dropping 20.4% over the last month, with a year-to-date decrease of 15.7%.
• These price changes have caught the attention of investors, especially after recent analyst upgrades and social media buzz around user engagement strategies. The resulting volatility makes it an ideal time to review what Pinterest is really worth.
• On our valuation checks, Pinterest scores a strong 6 out of 6, suggesting it merits a closer look through several valuation approaches. Stick with us as we explore the traditional metrics, and stay tuned for a detailed way to gain the full value picture by the end of the article.

Find out why Pinterest's -13.2% return over the last year is lagging behind its peers.

Approach 1: Pinterest Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates a company's true value by projecting its expected future cash flows and then discounting those amounts back to today's dollars. In essence, DCF helps investors look beyond the market price to assess what the company might actually be worth if these projections are accurate.

For Pinterest, the latest reported Free Cash Flow stands at $1.13 Billion. Analyst projections suggest continued growth, with Free Cash Flow expected to rise to approximately $1.91 Billion by the end of 2029. While analysts provide estimates for the next five years, forecasts for years beyond that use systematic extrapolation based on earlier trends.

Using the 2 Stage Free Cash Flow to Equity model, the DCF analysis estimates Pinterest’s intrinsic fair value at $55.46 per share. Given current trading prices, this suggests the stock may be trading at a 53.5 percent discount to its true worth. From a pure cash flow perspective, this positions Pinterest as significantly undervalued in the market at this time.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Pinterest is undervalued by 53.5%. Track this in your watchlist or portfolio, or discover 909 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Pinterest.

Approach 2: Pinterest Price vs Earnings

When evaluating profitable companies, the Price-to-Earnings (PE) ratio is one of the most widely used valuation tools. It tells you how much investors are willing to pay for each dollar of current earnings and is especially useful when a business posts consistent profits, like Pinterest does. The PE ratio helps level the playing field by enabling quick, apples-to-apples comparison with similar profitable firms.

The “right” PE ratio for a stock is not one-size-fits-all. Higher growth expectations typically justify a loftier PE, since investors believe today’s earnings will quickly become tomorrow’s larger profits. On the other hand, greater uncertainty or risk tends to lower a company’s deserving PE multiple. So, context matters. It is important to look beyond just the absolute number to figure out whether a stock is priced attractively.

Currently, Pinterest trades at a PE ratio of 8.8x, well below the Interactive Media and Services industry average of 16.4x and the average of similar peers, which sits at 56.1x. However, rather than focusing only on these benchmarks, Simply Wall St’s proprietary “Fair Ratio” estimates the PE Pinterest deserves, based on its specific growth outlook, profit margins, business model, market cap and risk factors. This Fair Ratio stands at 14.9x for Pinterest, reflecting what the market should reasonably pay for the shares, factoring in the finer details that industry averages often overlook.

Unlike peer or sector averages, the Fair Ratio provides a more tailored gauge. It does not just look at aggregates but adapts to Pinterest’s unique strengths, challenges and prospects. By comparing Pinterest’s current 8.8x PE ratio to its Fair Ratio of 14.9x, the stock appears meaningfully undervalued at the moment, with the market pricing in far less optimism than the company’s fundamentals may warrant.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1411 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Pinterest Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is your own investment story. It is the big-picture thesis about Pinterest’s future, where you set your assumptions for growth, margins, and a fair value that matches your personal outlook. Narratives link the company’s story, like its strategy and industry shifts, with the numbers in a transparent forecast, ultimately giving you a custom fair value based on your own convictions rather than market consensus.

Millions of investors on Simply Wall St’s Community page use Narratives because they are intuitive, always up to date, and help make big-picture decisions like when to buy or sell. As new events unfold, such as earnings releases or breaking news, Narratives automatically refresh to show you how the value story might change. This means you do not have to rely on outdated assumptions.

For Pinterest, some investors see huge upside, projecting a 5-year fair value as high as $109 per share if product innovation, margin expansion, and engagement all exceed expectations. Others take a more cautious view with fair values near $37 per share based on risks like slowing growth or tougher competition. Narratives give you the power to explore both possibilities and choose which perspective fits you best.

Do you think there's more to the story for Pinterest? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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