Should you hold onto your Pinterest stock?

Pinterest (Pinterest Stock Quote, Chart, News, Analysts, Financials NYSE:PINS) is likely to beat expectations when it reports second-quarter earnings on August 7, according to a July 21 note from Roth Capital Markets analyst Rohit Kulkarni. He sees signs of improvement in the ad market and raised his price target to $40 (from $30), while maintaining a “Neutral” rating.

“However, near-term, we remain slightly cautious as 3Q buy-side expectations seem elevated and 2Q user seasonality could put downward pressure on sentiment,” Kulkarni said.

He said the market is likely expecting Pinterest to beat its Q2 guidance, with revenue coming in above $982-million and EBITDA above $238-million. For Q3, if the company’s outlook shows revenue above $1.04-billion, which would mean faster quarter-over-quarter growth, even if it’s helped by easier comparisons, shares could move higher. But if monthly active users in the U.S. and Canada (102 million) or Europe (148 million) stay flat or drop, the stock might take a hit.

The Street expects Pinterest to report solid growth in Q2, with revenue up 14% to $975-million and a 24% profit margin. Global users are projected to rise 10% to 574 million, while U.S. and Canadian users are expected to be around 102 million. Revenue per user is forecast at $1.70. Looking ahead to Q3, analysts are expecting $1.03-billion in revenue and $291-million in Adjusted EBITDA.

Kulkarni said Pinterest’s stock is trading above its one-year valuation averages but still below its three-year average on some metrics. Since its Q1 earnings in May, the stock is up 27%, compared to an 11% gain in the S&P 500.

Kulkarni thinks that Pinterest will generate $1,266.8-million in Adjusted EBITDA on revenue of $4,174.0-million in fiscal 2025, up from his previous estimates of $1,250.5-million and $4,145.6-million, respectively. He expects those figures to improve to $1,553.8-million in EBITDA on $4,700.7-million in revenue in fiscal 2026, compared to earlier forecasts of $1,503.4-million and $4,608.8-million.

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