PINS
Pinterest, Inc.
$23.20
High-Growth Software
80%
Revenue × Terminal Margin DCF
Strong
·
Conviction
Undervalued
Trading 41.2% below fair value
You pay
$23.20
Bear
$22.88
Fair
$39.44
Bull
$57.48
Bear
$22.88
-1.4%
11% rev growth, 22% terminal margin
Fair
$39.44
+70.0%
18% rev growth, 29% terminal margin
Bull
$57.48
+147.8%
24% rev growth, 33% terminal margin
Key Value Driver
Revenue growth (18%) × margin expansion to 29%
Terminal Value % of EV
53%
Implied Market Multiple
3.1x
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 $25.08 from 48 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $39.44 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 $25.08 (from 48 analysts). Our estimate is 82% 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