Wall Street is making a broad-based and fearful visual discovery out-the-gate this week. But as the troubling price action relates to Pinterest (NYSE:PINS), investors now have the opportunity to buy a well-supported Pinterest stock, off and on the price chart, that’s on the rise in 2020. Let me explain.
When it comes to investing, every doggish stock doesn’t ultimately learn a new trick and deserve the longer-term affection of bulls on Wall Street. But the recently IPO’d online visual discovery platform is one which is rightfully earning that care. And there’s good reason too, if you can look past today’s growing coronavirus problem which has investors’ collective attention.
To be sure, 2019 was disaster for many PINS stock investors. Not only was Pinterest chopped down by more than 50% from its August high of $36.83, the fallout was enough put shares nearly 2% beneath their April IPO pricing of $19 when all was said in done.
But 2020 is shaping up nicely.
Newfound Street Enthusiasm
Shares of PINS have been an early standout in the new calendar year with the stock up about 15%. And at their recent best, the stock climbed nearly 30%. In large part Wall Street’s newfound enthusiasm can be tied to a recent market research note which confirmed Pinterest’s user base had grown by 9.1% in 2019 to 82.4 million users.
The increase was enough to surpass millennial-driven Snap’s (NYSE:SNAP) base of 80.2 million and 5.9% growth. The gains were also sufficient to put Pinterest behind only Facebook (NASDAQ:FB) and the social media giant’s Instagram platform.
Importantly, the gains don’t appear to be a one-off either. As InvestorPlace’s Josh Enomoto recently noted, the growth outlook for Pinterest looks compelling given the platform’s ability to reach multiple demographics, as well as educated users with earnings power. And bottom line, this type of combination is obviously attractive to advertisers and ultimately Pinterest’s future revenues and earnings potential.
Pinterest Stock Price Daily Chart
Technically speaking, the Pinterest stock price chart is also shaping up nicely just a month into the calendar year. Aside from sporting relative strength, a deep multi-day pullback tied to the broader market’s coronavirus-driven sell-off has now put PINS into a nice area of key technical support.
Source: Charts by TradingView
Monday’s panic low has challenged the well-watched 50% Fibonacci retracement level. What’s more, the reaction has also taken shares down to prices associated with last quarter’s earnings fallout. That sharp price gap was driven by over-the-top investor disappointment as sales dropped below 50% growth for the first time. I suspect Monday’s revisit isn’t going to stir up bad memories. Instead, it’s likely it will prove a short-lived opportunity to buy PINS at an attractive discount.
Net, net I view Pinterest stock as being in position for a purchase today. However, I’d respect both Monday’s bullish, hammer-like doji and obvious threat a growing bearish contagion could turn uglier. And one smarter way to do this with guaranteed authority is to complement PINS shares with a flexible, limited and reduced risk options-based collar strategy.
Disclosure: Investment accounts under Christopher Tyler’s management do not currently own positions in securities mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.
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