Pinterest (NASDAQ:PINS) is quietly staging a comeback. The visual discovery and shopping platform, once seen as a pandemic-era flash-in-the-pan, is showing renewed strength in both user growth and advertiser traction. Pinterest is gaining relevance in the advertising world through strategic investments in artificial intelligence, new lower-funnel performance tools, and full-funnel campaign capabilities that align with the way users interact with its platform. With a cheap forward multiple compared to peers like Reddit and Snap, some analysts see the stock as undervalued. Let us break down the biggest reasons why Pinterest could actually be a solid bet for the future and also analyze a key challenge that may slow it down in its journey.
Performance+ Suite & The Lower-Funnel Transformation
Pinterest’s most significant monetization breakthrough is its Performance+ suite, which brings together AI-powered tools aimed at optimizing advertising at the lower funnel. Historically, Pinterest excelled at the upper funnel—users searched for inspiration, but actual purchases often happened elsewhere. Now, thanks to innovations like direct links, ROAS-based bidding, creative resizing, and real-time AI optimization, Pinterest is evolving into a full-funnel platform. Advertisers using Performance+ are seeing measurable benefits: PacSun, for instance, tripled its return on ad spend with the new ROAS bidding model. Campaigns using Performance+ outperform traditional campaigns in 80% of A/B tests, and ad clicks have surged year-over-year. Advertisers are increasingly allocating 5-10% of their digital ad budgets to Pinterest, with larger retailers and brands embracing the platform’s improved conversion tracking and performance metrics. With its simplified campaign setup, deep personalization tools, and proprietary knowledge graph embeddings, Performance+ is enabling Pinterest to penetrate always-on advertising budgets and secure durable client relationships that may support steady revenue growth over the next several quarters.
Visual Search & Proprietary AI Signal Are Creating a Moat
Pinterest’s strategic focus on visual search is emerging as a critical competitive edge in an AI-driven world. At the core is its proprietary multimodal AI model that combines text and image understanding, enabling the platform to surface highly personalized and actionable content to users. The visual search feature is especially appealing to Gen Z—Pinterest’s fastest-growing cohort—who are accustomed to discovery through visual content. The platform’s Taste Graph, which has grown 75% over the past two years, maps hundreds of billions of user actions and helps train its AI systems for content recommendation and ad targeting. The result is a 30% improvement in Pinterest’s ability to recommend relevant Pins compared to leading off-the-shelf models. For users, this means better discovery experiences; for advertisers, it translates into higher click-through rates and deeper engagement. Pinterest’s new search refinement tool allows users to zero in on specific visual elements—like a pair of sneakers in a lifestyle shot—and filter by AI-generated attributes such as "earth tones" or "graphic pattern." This unique feedback loop, where users plan purchases in a visual, curated format before buying, gives Pinterest a structural advantage in training AI models for commerce—a differentiator few platforms can match.
Global User Growth & International Monetization Momentum
Despite competitive pressures from TikTok and Meta, Pinterest continues to expand its global footprint. It is worth mentioning that in its Q1 2025 earnings report, Pinterest delivered a 10% year-over-year increase in monthly active users (MAUs), reaching a record 570 million globally. Revenue rose 16% year-over-year to $855 million, while adjusted EBITDA climbed to $172 million, reflecting improving operating leverage. Its Rest of World (RoW) user base grew 14%, compared to 4% in the U.S. and 5% in Europe. While monetization per user still lags—international ad prices are lower and ARPU remains well below that of peers like Meta and Snap—the potential upside is material. In Q1, ad impressions jumped 49% globally, led by international expansion, even as ad pricing declined 22% year-over-year due to mix shift. More importantly, revenue from shopping ads in Europe and RoW grew more than 3x the overall regional growth rate, signaling that Pinterest’s lower-funnel playbook is gaining traction outside North America. The company added reseller partnerships in 8 new international markets and is working to replicate its U.S. monetization success abroad. Emerging advertiser verticals such as financial services, telecom, and entertainment are beginning to allocate more spend on the platform, seeing Pinterest as a high-intent destination for reaching users in major life moments—from weddings to buying a car. While these verticals still contribute a small fraction of total revenue, continued adoption could unlock meaningful ARPU gains over time.
Pricing Pressure & International Monetization Risks Remain
Notwithstanding Pinterest’s user and revenue growth, there are ongoing concerns about its ability to grow revenue per user—especially internationally. The platform’s strong impression growth masks a 22% decline in average ad pricing, primarily due to the expansion into previously unmonetized or undermonetized regions. While this shift helps headline revenue, it dilutes overall ARPU and profitability metrics. Even in its most mature market (U.S. and Canada), Pinterest’s ARPU of $6.94 still lags far behind Meta’s $52 and Snap’s $12+. This suggests that Pinterest’s monetization engine, while improving, remains underdeveloped. Additionally, recent macroeconomic pressures, including tariff shifts, have led to temporary ad spend pullbacks from Asia-based e-commerce advertisers in the U.S. Though Pinterest is attempting to offset this with geographic diversification, the volatility underscores its dependence on external economic factors. Furthermore, while Performance+ is showing promise, it’s still in the early days of adoption. Advertisers that are not yet integrated with Pinterest’s conversion APIs or clean room measurement tools may not fully credit the platform for conversions, causing spend to lag click-through performance. These risks could slow Pinterest’s ability to drive consistent revenue growth and achieve ARPU parity with competitors.
Final Thoughts
Source: Yahoo Finance
We can see Pinterest’s stock witnessing a strong recovery from its lows in April 2025 but it has still not crossed its 6-month high. The company is currently trading at an NTM EV/ Revenue multiple of 5.06x which is lower than that of peers like Reddit, Snap, Tencent and even Alphabet. It is also one of the few players to have a positive bottom-line and has achieved profitable growth. Moreover, the management’s investments in AI-powered tools, visual search capabilities, and lower-funnel monetization have started to show tangible results—especially in user engagement, click growth, and advertiser adoption. Overall, we believe that Pinterest’s improving fundamentals are a very positive sign and the stock is definitely worth considering as a long-term investment opportunity.
