PINS
Pinterest, Inc.
$19.29
High-Growth Software
80%
Revenue × Terminal Margin DCF
Strong
·
Conviction
Undervalued
Trading 47.9% below fair value
You pay
$19.29
Bear
$22.29
Fair
$37.03
Bull
$52.56
Bear
$22.29
+15.5%
10% rev growth, 22% terminal margin
Fair
$37.03
+92.0%
17% rev growth, 29% terminal margin
Bull
$52.56
+172.5%
22% rev growth, 33% terminal margin
Key Value Driver
Revenue growth (17%) × margin expansion to 29%
Terminal Value % of EV
52%
Implied Market Multiple
2.5x
Summary
Our base-case estimate uses a discounted cash flow model based on revenue growth and long-run free cash flow margins. We then blend that result with the average analyst price target of $25.66 from 48 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $37.03 per share.
Warnings
Stock-based employee pay is 21% of revenue — your ownership shrinks by about 2.0% each year as new shares are issued. Our estimate already accounts for this dilution.
Gross margin of 80% means each dollar of revenue is highly profitable. As the company grows, overhead costs should shrink as a share of revenue, boosting overall profits.
Wall Street's average price target is $25.66 (from 48 analysts). Our estimate is 63% above the consensus -- consider that gap carefully.
Key Risks
- Current FCF misleads — the model values future margins, not today's cash
- SBC dilution is the hidden tax: 2-4% annual share growth compounds fast
- Revenue deceleration is inevitable — the question is when and how steep