Pinterest(NYSE: PINS) stock isn’t doing well. The company’s shares are down 30% this year alone and 40% over the past 12 months. This is partly due to the impact of tariffs on Pinterest’s financial results. Last year, the social media specialist’s revenue suffered as demand for ads on its platform from large retailers — who were especially hit by heavy import duties — declined as they cut marketing spending to reduce expenses and protect their margins. Although this is a real issue for Pinterest, there remain excellent reasons to buy the stock and hold it for the long term. Let’s consider three of them.
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The digital advertising market is competitive, with many social media websites and apps (and platforms outside this niche) where retailers can target potential customers. Pinterest is not the largest among them, but it does have some advantages that set it apart. Pinterest offers a different experience from most of its peers due to its visual focus. The company’s platform is not geared toward breaking news, discussions, or debates on divisive issues. Instead, it helps spark its users’ creativity through a vast library of images.
That also makes it an excellent ad platform. Pinterest users are on the website because they are engaged in some creative activity and seeking inspiration. It can range from what outfit to put together to how to organize a room, or even planning a wedding — the bottom line is, they often need more than just inspiration. They also need to buy various items to turn their visions into reality. That desire is one of the things that makes advertising on Pinterest attractive. The company’s focus means it can coexist with other social media giants.
Pinterest has a deep ecosystem of users that continues to grow, even as it faces headwinds. The company ended the fourth quarter with 619 million monthly active users (MAUs), an increase of 12% year over year and an all-time record.
Pinterest has developed a network effect. More users on its platform means a larger library of images and more recommendations, which helps boost discovery, engagement, and ad sales. The cycle continues as the company’s deeper content library and engagement help it fine-tune its recommendation algorithm. This is a major strength that could help Pinterest remain a leading platform in the social media industry for a long time.
Pinterest’s 2025 financial results were not as strong as expected, but they were not completely terrible either. The company’s revenue increased 16% year over year to $4.2 billion, while its adjusted net income rose 22% to $1.1 billion. And just as important, there are clearly areas where Pinterest can improve over the long run. Consider the company’s average revenue per user (ARPU). This metric came in at $7.21 for the year, up 4% year over year. But here’s where it gets interesting: ARPU in the U.S. and Canada was $30.84.
In Europe, it was $5.12, and in the rest of the world, it was just $0.83. The good news is that ARPU outside of North America has been growing much faster, and there is still a vast opportunity here. As management said in the company’s third-quarter earnings conference call, they are now exporting the same strategy that has made Pinterest so successful with advertisers in the U.S. and Canada to international regions.
Making progress within this underpenetrated opportunity will help boost ARPU and sales over the long run. What about Pinterest’s tariff woes? This situation is constantly changing and evolving, but my view is that once things stabilize, Pinterest’s ad business will rebound as retailers boost marketing spend again. In the meantime, the company is increasingly targeting smaller and mid-size advertisers while implementing various artificial intelligence-based tools on its platform to boost engagement and improve its ad launch platform for businesses. So, Pinterest’s prospects remain bright, and the stock looks attractive after significantly lagging the market over the past year.
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Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Pinterest. The Motley Fool has a disclosure policy.
