Pinterest, Inc.

On the Street's numbers Pinterest looks very cheap: 8.3x FY2027E EPS and about 7.5x 2026 adjusted EBITDA. Our P/E basis is FY2026E and FY2027E consensus non-GAAP EPS as of October 7, which excludes stock comp. The rows below the P/E lines show what that exclusion is worth: trailing free cash flow of $1.28B shrinks to $0.26B once stock comp is counted.

Pinterest is 43.2% below its $35.24 closing high of October 27, 2025 ($35.42 intraday), and it got there in air pockets. The stock fell 21.8% on November 5, 2025, the day after the Q3 2025 report, and fell 16.8% on February 13, 2026, the day after the Q4 report and Q1 guidance, to the $15.42 closing low ($13.84 intraday). It fell 8.7% on August 5, the day after a Q2 beat that came with slower Q3 guidance, and 9.2% on September 9, when CEO Bill Ready warned of near-term international pressure at a Goldman Sachs conference. In between, the stock rose 9.3% on March 3 on Elliott's investment and the buyback, and added 6.9% on May 5 after the Q1 beat. The CFO's resignation was disclosed after the close on August 28; the stock fell 6.4% on August 31, the next trading day.

At $20.03 the stock is 6.6% below its 50-day average ($21.45) and 5.4% below its 200-day ($21.17), down 22.6% this year and 37.5% over 12 months. The 50-day sits just above the 200-day, so the long trend has flattened rather than rolled over, and the stock is 29.9% above the February low. There is no uptrend to own yet.

Pinterest pays its people largely in stock. Stock-based compensation was $880M in 2025, 20.9% of revenue, and $556M in the first half of 2026, 25.4% of revenue. Meta's ran at 11.7%. Adjusted EBITDA, non-GAAP EPS and the consensus built on them all add it back, which is how the same company shows 8.3x forward earnings and a $120M GAAP net loss for the first half. In three of the last eight quarters stock comp was larger than adjusted EBITDA.

Stock comp is a real cost because the shares are real. Over the last four quarters free cash flow was $1.28B and stock comp was $1.02B. What is left for owners is about $0.26B, 2.3% of the market value, not the 11.3% free-cash-flow yield a screen shows. Pinterest also spent $380M over the same period withholding shares to pay employees' RSU taxes.

This year's buyback was large enough to shrink the count anyway. Pinterest spent $2.0B in the first half and retired about 111 million shares at an average $18.17; shares outstanding fell 14.9% to 565.5 million at June 30. Elliott's convertible paid for about half. The grant book ran the other way: 59.2 million new RSUs at an average $19.19, against 37.3 million in all of 2025 at $29.70. Unvested awards rose to 69.1 million. Counting shares, unvested RSUs and options, the economic count fell 9.7%, from 712.2 million to 643.1 million.

The grant cycle is where the share price feeds back into the cost. On the Q2 call management attributed the jump in stock comp to the annual grants and "the lower stock price at the time of grant, which meant we needed to issue more RSUs to remain competitive on compensation." The value granted in the first half, about $1.14B, already exceeded the $1.11B granted in all of 2025, and unrecognized stock comp rose to $1.44B. If the stock is still near $20 at the 2027 grant cycle, the same arithmetic repeats. If it has recovered, fewer shares cover the same pay. Momentum is usually a technical argument; here it is also a cost input.

Pinterest is a visual search and discovery platform with 640 million monthly active users, up 11%. It earns nearly all its revenue from advertising, increasingly sold as automated performance campaigns (Performance+). People come to plan purchases, and the company reported more than 80 billion searches a month in February, commercial intent that feed-based platforms lack. In Q2 the number of ads served rose 16% while the price per ad rose 1%: growth is coming from volume, not pricing.

Monetization is the gap and the opportunity. The U.S. and Canada has 106 million of the 640 million users but $880M of the $1.18B in revenue, at $8.30 per user per quarter against $0.23 in Rest of World. The near-term problem is that growth abroad stalled. Europe slowed to 12% in Q2 as Pinterest lapped last year's surge of cross-border advertisers and Asia-based cross-border retailers cut back after European regulatory action, pressure management said was continuing into Q3. Pinterest is also rebuilding its international sales organization.

Meta, Google, TikTok and Amazon compete for the same retail budgets, and AI shopping assistants are a new contender for the start of a product search. Pinterest's answer is its own AI: visual search, Performance+, Visual Search Ads (launched September 17) and tvScientific, a connected-TV performance ad platform bought on February 17 for $465M, which management plans to fold into Performance+ in 2027.

We do not use a DCF on reported free cash flow: that cash flow excludes stock comp, a cost Pinterest pays in shares, so the DCF would overstate value by roughly the stock-comp line. Instead we value Pinterest on 2027E consensus EPS less after-tax stock comp, a basis comparable with Meta and Reddit, whose consensus EPS already includes theirs.

Our base case holds stock comp at 20% of 2027 revenue, close to its 2025 level and below this year's pace, and pays 23x, a small premium to Meta and Reddit because earnings after stock comp should grow faster than reported earnings as the charge shrinks relative to revenue. Adding $0.47 a share for the balance sheet gives $21. Each 2 points of stock comp moves the value by $3–4 a share, more than each turn of multiple.

Probability-weighted value: $21 (+5% vs the reference price).

Bill Ready has been CEO since 2022. Co-founder Ben Silbermann is non-executive chair and, with co-founder Paul Sciarra, still holds Class B shares carrying 20 votes each. The finance team is turning over: CFO Julia Donnelly resigned on August 26, and James Dibbo, who ran finance for Amazon's advertising, entertainment and corporate development businesses, becomes CFO on October 26 with RSU awards valued at $19.98M. A new chief accounting officer started August 26, and a chief business officer from DoorDash joined in January. Headcount was 5,116 at June 30 against 5,265 at year-end, even after a January plan to cut less than 15% of staff: the plan moves resources into AI roles, and the tvScientific team joined in February.

The balance sheet changed more in six months than in the previous five years. In March Elliott, a shareholder since 2022 with a board seat, bought $1.0B of 1.75% convertible notes due 2031 with a $22.72 conversion price, 30% above the prior close. Pinterest used the proceeds for a $1.0B accelerated repurchase (54.8 million shares at $18.25) and kept buying with cash on hand. It will settle note principal in cash, and a capped call bought in June for $99.2M offsets conversion dilution up to $30.59. Cash and securities fell from $2.47B to $1.27B, leaving net cash of about $0.27B. $1.95B remained under the $3.5B authorization at June 30.

Insiders sold about $37.0M of stock since mid-April and bought none. Most of it, $32.0M, was Silbermann, selling almost entirely under a Rule 10b5-1 plan adopted February 27 that allows up to 4.5 million shares through May 2027; he has sold 1.51 million so far. Ready has made no open-market sales; his only dispositions were shares withheld for taxes. The table uses Form 4 transaction prices.

The top two risks reinforce each other. Slower growth keeps the stock down, a low stock price makes the 2027 grants more dilutive, and more dilution keeps the stock down.

Pinterest also faces a securities class action, Uziel v. Pinterest in federal court in Northern California, filed in late March on behalf of investors who bought between February 7, 2025 and February 12, 2026, the day of the Q4 report. It alleges the company hid weakening advertising revenue, overstated its ability to manage the impact of tariffs and was likely heading for a restructuring. The 10-Q does not single the case out. We treat it as a cost and a distraction rather than a threat to the thesis, but it is unresolved.

Options price a move of about ±12.1% into the November 6 expiry, which captures the expected November 3 report. Calls outnumber puts in open interest (166,589 against 127,819, a put/call ratio of 0.77). The $20 strike holds the most open interest and the largest positive dealer gamma, which tends to hold the stock near current levels; below $18 the book turns put-heavy. Short interest rose to 59.1 million shares at the September 15 settlement from 48.1 million two weeks earlier. Shorts leaned in after the CFO exit and the international warning, so a clean Q3 print would force some of them to cover.

The Street likes the stock more than the tape does. The consensus mean target is $27.93 (median $27, range $23–$34) as of October 7, with 26 Buy, 21 Hold and 1 Sell ratings. Most targets were set on August 5, when the stock traded around $23–26. At $27.93 Pinterest would trade at 11.6x FY2027E consensus EPS, a multiple that treats stock comp as free. Our $21 target is 25% below the consensus mean.

What would move us to BUY. A 2027 framework from the new CFO that caps stock comp below 18% of revenue, a Q4 guide of 15% or better with Europe re-accelerating, or the stock reclaiming its 200-day average on rising estimates. Two of the three would lift our target to about $24.

What would move us to SELL. A Q4 guide below 12% growth, stock comp still above 22% of revenue into 2027, or monthly active user growth falling below 8% as AI assistants take product search. Any one would cut our multiple toward 17x.

HOLD, 12-month target $21 (+5% versus the $20.03 close on October 6). Pinterest is a growing, cash-generative platform whose cheapness is mostly an accounting convention: count stock comp as the cost it is and the stock trades about in line with Meta. The probability-weighted value is within a dollar of our target. For a momentum investor there is no trend to own yet, but this is a stock where a recovering price would improve the fundamentals directly, by shrinking the shares needed for the 2027 grants. The next checkpoint is the Q3 report, expected November 3, a week after James Dibbo takes over as CFO.