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Here's Why Pinterest Is Rising on Tuesday

What happened

The stock market was having a mildly strong day on Tuesday with the S&P 500 index higher by about 0.5% as of 11:45 a.m. ET. However, social media stock Pinterest (NYSE: PINS) was a major outperformer, with shares higher by nearly 5%.

So what

There are two likely explanations for today's move. First is that high-growth technology stocks are getting a nice pop in general, and that's especially true of those that were beaten down in the tech sell-off of recent weeks. The tech-heavy Nasdaq is by far the best performer of the three major indexes on Tuesday.

Image source: Getty Images.

Second, Pinterest was the recipient of a somewhat favorable analyst note on Tuesday. An analyst at Wedbush maintained an outperform rating on the stock, and although the price target was lowered from $57 to $45, this still represents roughly 32% upside over the current share price, so investors seem happy to hear it.

Now what

While this move is certainly welcome news by investors after the stock's recent slump, it's important to mention that analyst commentary should be taken with a big grain of salt. It is far more important for investors to watch Pinterest's user growth, which has trended in the wrong direction for the past two quarters, and its monetization, which has improved dramatically, when the company reports fourth-quarter results in a few weeks.

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Matthew Frankel, CFP® owns Pinterest. The Motley Fool owns and recommends Pinterest. The Motley Fool has a disclosure policy.


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