Why Pinterest stock exploded this week

stock Pinterest (leg -0.22%) The image-based social media company was one of the winners this week, reporting better-than-expected results in its first-quarter earnings report.

The company also announced strong guidance for the second quarter. As a result, as of 2:30 PM ET on Friday, the stock was up 19% for the week.

Image source: Pinterest.

Pinterest wins big.

After a major setback in business due to the fallout from the pandemic, Pinterest has regained steady growth, and recent reports have boosted confidence in the company’s future.

First-quarter revenue rose 23% to $740 million, easily surpassing expectations of $699.9 million.

This growth was supported by a 12% increase in global monthly active users to 518 million, and a 10% increase in average revenue per user (ARPU) across all segments globally.

In conclusion, Pinterest impressed, with adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) improving from $27 million to $112.9 million. It also cut general and administrative expenses and benefited from slowing growth in other segments, likely due in part to layoffs a year ago. Adjusted earnings per share also increased from $0.08 to $0.20, beating the consensus of $0.13.

“Thanks to our investments in AI and shoppability, we are delivering greater returns to advertisers and gaining access to their performance (advertising) budgets,” said CEO Bill Ready.

What’s next for Pinterest

Investors were also impressed by Pinterest’s second-quarter guidance. The company expects revenue to increase 18% to 20% to $835 million to $850 million, ahead of the consensus of $826.5 million.

Pinterest also expects to gain leverage on its bottom line as costs grow more slowly.

Pinterest remains a unique asset in social media and appears poised to overcome the volatility caused by the pandemic and achieve steady growth. Keep an eye on user growth and ARPU. If they continue to move in the right direction, stocks should continue to rise.