Pinterest Stock: A Kid-Friendly Investment Opportunity?

Pinterest, Inc. (NYSE:PINS) has been a popular social media platform for users to discover and save ideas, primarily focused on visual content. As a kid-friendly stock, Pinterest has taken steps to create a safe and engaging environment for younger users. However, the question remains: is Pinterest the best kid-friendly stock to buy right now? Let's dive into the platform's strengths, weaknesses, and competition to determine its investment potential.

Pinterest's Strengths as a Kid-Friendly Platform

1. Visual Focus: Pinterest's primary content is images and short videos, making it less text-heavy and more engaging for younger users. This visual focus can help keep kids interested and entertained while browsing the platform.
2. Age-appropriate Content: Pinterest has implemented age restrictions and privacy settings to protect younger users. Profiles for users under 16 default to private, and they can only have followers they've accepted through a unique link. This helps limit exposure to inappropriate content.
3. Body-type Filters: Pinterest has introduced body-type filters for searches on women's fashion and beauty, which include a variety of different body types, including disabled bodies. This helps promote inclusivity and body positivity, which can be particularly important for teens.
4. Reporting and Blocking Mechanisms: Pinterest encourages users to report any objectionable items they encounter on the platform. The site also allows users to unfollow people, boards, or topics if they don't want to see certain items on their homepage, giving users some control over their experience.

Pinterest's Weaknesses and Concerns

1. Inappropriate Content: Despite Pinterest's efforts to limit inappropriate content, there have been concerns about the platform's ability to effectively prevent the spread of mature or sensitive material to minors. In 2017, a British teen died by suicide after searching for items about depression and suicidal quotes on Pinterest, highlighting the potential dangers of unfiltered content.
2. Algorithmic Recommendations: Pinterest's algorithm has been criticized for recommending inappropriate content to users who have searched for similar items. An NBC News investigation found that Pinterest was recommending photos and videos of young girls to users who had sought similar content, which could inadvertently enable pedophiles to access, collect, and sexualize imagery of children.
3. Lack of Real-time Moderation: While Pinterest has a zero-tolerance policy for sexual exploitation of children and is adding options to specifically flag content involving minors, the site's content is user-generated and may not be moderated in real-time. This could allow inappropriate content to slip through the cracks and be visible to users before it is removed.

Pinterest's Competition in the Kid-friendly Stock Space

Pinterest faces competition from other kid-friendly platforms, such as YouTube Kids and Disney+. These platforms have their own strengths and weaknesses, but they also offer more controlled environments and robust parental controls. YouTube Kids, for example, has a separate app with content curated for younger audiences, and parents can set time limits and block specific channels or videos. Disney+ also offers a kid-friendly experience with parental controls, including a dedicated kids profile with content filtered for younger viewers.

Pinterest's Valuation and Investment Potential

Pinterest's stock price has been volatile in recent years, with the company reporting a reasonable FQ4 earnings card despite a decline in monthly active users (MAUs). The company's monetization engine continued to show resilience, with ARPU in the US increasing to $7.43 and $0.57 in its international segment. However, its growth has decelerated, with revenue growing just 20% YoY in FQ4, compared to 43% in the previous quarter.

Pinterest's valuation has been slashed, with its stock trading well below its 2Y mean of 12x. Moving forward, management guided FQ1 revenue to increase "in the high teens" YoY. However, management also guided "non-GAAP operating expenses to grow around 40% year-over-year," as it invests in improving its creator and content ecosystem and headcount increase. Therefore, Pinterest's top line and profitability are expected to take a hit concurrently.

Conclusion: Is Pinterest the Best Kid-friendly Stock to Buy Right Now?

Pinterest has taken steps to create a safe and engaging environment for younger users, but its approach may not be as comprehensive as those of other kid-friendly platforms like YouTube Kids or Disney+. Pinterest's content moderation and safety measures seem to rely more on user discretion and reporting, whereas other platforms offer more controlled environments and robust parental controls.

While Pinterest's valuation may seem attractive, its fundamental thesis could have changed due to the rise of TikTok and other competitors. Pinterest's growth has decelerated, and its MAUs have continued to decline, which could indicate that the platform is not as impervious to intense competitive pressures as previously thought.

Investors should consider Pinterest's strengths and weaknesses, as well as its competition, before making an investment decision. Although Pinterest may not be the best kid-friendly stock to buy right now, it could still be an attractive option for investors looking for exposure to the social media and e-commerce sectors. However, it's essential to monitor the platform's performance and competitive landscape closely to ensure that Pinterest remains a solid investment choice.