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pinterest (PINS 0.69%) and Metaplatforms (META -1.08%), the tech giant formerly known as Facebook, approaches the social media market from two different angles. Pinterest encourages its users to share their interests, hobbies and ideas on its virtual pinboards, and allows retailers to promote their products through Buyable Pins. This interest-driven format insulates Pinterest from the hate speech and fake news controversies that have plagued Facebook and other social media platforms.

Meta’s sprawling ecosystem includes Facebook, Messenger, Instagram, WhatsApp and its virtual reality services. Facebook encourages its users to connect with their friends, family members and businesses they frequent through its network and the Messenger app. Instagram persuades its users to follow popular accounts and brands. It also offers “social shopping” features on both platforms.

Image source: Getty Images.

Facebook and Instagram have both introduced shorter videos (via Watch and Reels, respectively) to counter ByteDanceit’s TikTok. WhatsApp’s messaging app is attracting users who spend less time on its social media platforms, and it’s locking more users into its new Horizon Worlds metaverse playground with its VR headsets.

Pinterest’s valuation hovers around $16.6 billion and it claimed 433 million monthly active users in its most recent quarter. That makes it much smaller than Meta, which has a market capitalization of around $411 billion and had 3.65 billion monthly active users through its “family” of apps last quarter. But could Pinterest catch up with Meta, or even eclipse the market leader, by 2030?

How big will Pinterest be?

Pinterest’s revenue grew 51% in 2019, 48% in 2020, and 52% to $2.6 billion in 2021. It also became profitable thanks to non-GAAP (generally accepted accounting principles) and adjusted EBITDA (earnings before interest, taxes, depreciation). , and depreciation) in 2019, and remained in the black by both measures in 2020 and 2021.

Pinterest’s growth accelerated dramatically throughout the pandemic as people stayed home and searched for more ideas for online shopping, home improvement projects, recipes and family activities on its platform. As a result, its monthly active users (MAUs) hit an all-time high of 478 million in the first quarter of 2021.

But in 2022, analysts expect Pinterest’s revenue to grow just 9% to $2.8 billion as its adjusted EBITDA drops 50% to $407 million. This deceleration can be attributed to Pinterest’s continued loss of MAU in a post-pandemic world, the impact of inflation and other macroeconomic headwinds on the broader digital advertising market, and the slowing market e-commerce – which has dampened market interest in Pinterest’s buyable pins.

However, Pinterest’s MAUs stabilized in the first half of fiscal 2022, while average revenue per user (ARPU) in its three highest revenue-generating markets – the United States, Canada and Europe – continues to grow year by year. That’s why analysts still expect Pinterest’s revenue and adjusted EBITDA growth to level off and accelerate over the next two years.

Period

2022

2023

2024

Estimated revenue growth

9%

16%

20%

Estimated adjusted EBITDA growth

(50%)

38%

40%

Data source: S&P Global.

If this best-case scenario occurs and Pinterest continues to grow annual revenue at a compound annual growth rate (CAGR) of 20% between 2024 and 2030, it could generate nearly $12 billion in revenue by the last year.

But that would still only be about a tenth of the $117.9 billion in revenue Meta generated in 2021, and less than a third of the $39.4 billion in net revenue he brought that year. In other words, Pinterest is highly unlikely to become bigger than Meta by the end of the decade, unless antitrust regulators abruptly shut down Meta’s entire business.

But Pinterest might have more upside potential than Meta

Nevertheless, Pinterest could still grow at a much faster rate than Meta over the next few years. Analysts currently expect Meta’s revenue to grow at a lackluster CAGR of 8% between 2021 and 2024 as it grapples with slower growth from its core platforms, AppleCurrency privacy on iOS, competition from TikTok and other platforms, and macroeconomic headwinds.

It also lacks room to grow since its family of apps already serves almost half of the world’s population. Meta believes expanding its metaverse ecosystem will reduce its reliance on these aging platforms, but this money-making effort may only be holding back a niche group of VR users.

Pinterest’s stock doesn’t look cheap at 40 times forward earnings, especially compared to Meta’s forward price-to-earnings ratio of 14. But if Pinterest plays all its cards right, it could generate bigger returns for investors than Meta over the next eight years. years – even if this is far from equaling the market capitalization of the social media leader.

Randi Zuckerberg, former director of market development and spokesperson for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a board member of The Motley Fool. Leo Sun holds positions at Apple and Meta Platforms, Inc. The Motley Fool holds positions and endorses Apple, Meta Platforms, Inc. and Pinterest. The Motley Fool recommends the following options: long calls $120 in March 2023 on Apple and short calls $130 in March 2023 on Apple. The Motley Fool has a disclosure policy.