Pinterest's RS Rating Surge and Earnings Catalysts: A High-Conviction Buy Signal?

Pinterest (NYSE:PINS) has entered a pivotal moment for investors. Its Relative Strength (RS) Rating surged to 82 in July 2025, marking a critical technical milestone. Combined with its #1 ranking in the Internet-Content sector, this signals a potential breakout for the stock. As earnings reports loom on August 7, the question is whether Pinterest can sustain this momentum—or if this is a fleeting blip. Let's dissect the catalysts and risks.

Technical Momentum: A Breakout at $40.90

Pinterest's RS Rating leap to 82 is no minor shift. Historically, stocks above 80 often ignite significant upward trends, as seen in sectors like tech and consumer discretionary. This rating reflects Pinterest's outperformance over the past 52 weeks compared to its peers—a stark contrast to its earlier struggles.

The technical picture is bullish. Analysts highlight a double-bottom chart pattern with a $40.90 buy point. A breakout above this level, paired with strong volume, could trigger a surge toward its 52-week high of $45.00. However, failure to hold above $40.90 risks a retest of recent lows near $36.00.

Earnings Catalysts: AI, User Engagement, and Ad Growth

Pinterest's valuation hinges on its ability to monetize user growth and leverage AI-driven tools. Here's why investors should watch for these three key metrics in Q2 earnings:

1. Ad Platform Evolution with AI/Performance+ Tools:
   Pinterest's Performance+ suite—which uses AI to optimize ads for conversion—has been a growth driver. Analysts estimate this could boost ad revenue by 15–20% in 2025. A strong Q2 update on Performance+ adoption and ROI metrics would validate its competitive edge.

2. User Engagement and Traffic Trends:
   Despite a -12.69% month-over-month drop in June traffic, Pinterest's global rank remains #33 with 1.07 billion visits. However, sustained declines could undermine its long-term value. Look for signs of stabilization in engagement metrics like daily active users (DAUs) and time spent on the platform.

3. Earnings Beat Potential:
   Analysts expect Q2 revenue of $470 million (up 16% YoY) and adjusted EPS of $0.03. A beat here would reinforce Pinterest's profitability. Notably, its net margin hit 1.04% in Q1, outperforming sector peers—a trend that could attract value investors.

The Intrinsic Value Case: $69.54 by 2026?

Analysts project Pinterest's intrinsic value could hit $69.54 by 2026, implying a 49% upside from current levels. This assumes:
- Revenue growth expands to 20% YoY by 2026, driven by AI-driven ad efficiency.
- Margin improvements: Net margin rises to 5% as scale economies kick in.
- Multiple expansion: A P/E multiple of 22x (vs. current 11x) if earnings stability materializes.

Risks to the Bull Case

• Earnings Miss: If Q2 results disappoint on user metrics or ad revenue, the RS Rating could retreat below 75, triggering a sell-off.
• Technical Breakdown: A failure to hold above $40.90 could send shares toward $36.00.
• AI Execution Risks: Competitors like Meta and Google are also doubling down on AI ad tools; Pinterest's edge isn't guaranteed.

Investment Thesis: Buy the Dip, Target $45+

Pinterest's RS Rating jump to 82 and #1 sector rank position it as a high-conviction buy for growth investors. The August earnings report is the catalyst to watch—if it delivers on ad growth, margin trends, and user engagement, a post-earnings breakout could push shares toward $45. Beyond that, the $69.54 intrinsic value target hinges on sustained execution.

For now, focus on entering near $40.90 with a stop-loss below $38.00. A multi-year breakout could be in play—if Pinterest's AI tools and ad platform can dominate the visual search market.

Stay tuned for our post-earnings analysis on August 8.