Pinterest (PINS -1.52%) and Trump Media & Technology Group (DJT -6.25%) operate very different social media platforms. Pinterest’s users pin their ideas, hobbies, and interests to its virtual pinboards, and it’s generally well insulated from the polarizing issues with politics, hate speech, and fake news that are plaguing other social media platforms. Its shoppable pins also make it a unique place for businesses to attract online shoppers.
Trump Media’s Truth Social, which was launched just over two years ago, is a social media platform that aims to “fight back against the big tech companies” that “curtail debate in America and censor voices.” It closely resembles X, the platform formerly known as Twitter, but it primarily attracts conservative and right-leaning users.
Image source: Getty Images.
Pinterest has gone through some wild swings since its IPO at $19 per share five years ago, but it has still more than doubled to about $40. Trump Media went public by merging with a special-purpose acquisition company (SPAC) this March, but its stock price has declined by more than 30% from its opening price of $70.90 on its first trading day. Will Pinterest remain the better social media play than Trump Media for the foreseeable future?
Pinterest’s business is growing again
Pinterest experienced a major growth spurt during the pandemic as more people searched for online shopping ideas, family activities, recipes, and DIY projects on its pinboards. However, the company experienced a tough slowdown after the pandemic passed — and many investors dismissed it as a fad stock when its growth cooled off.
That’s why Pinterest’s revenue only rose 9% in both 2022 and 2023. But in the first quarter of 2024, its year-over-year revenue growth accelerated for the fifth consecutive quarter. Its monthly active users (MAUs) also increased 12% year over year to 518 million — marking its second consecutive quarter of double-digit MAU growth — as its average revenue per user (ARPU) growth turned positive again over the past three quarters .
Pinterest attributed that acceleration to its overseas expansion, fresh video content, AI-driven recommendations, new e-commerce tools, and an influx of Gen Z users, who now account for more than 40% of its MAUs. It says the human-driven curation across its platform creates a “flywheel effect” that consistently feeds more first-party data to its AI algorithms to strengthen its core advertising and social commerce businesses.
Over the next three to five years, Pinterest expects its revenue to grow at a “mid-to-high teens” compound annual growth rate (CAGR). Analysts expect its revenue and adjusted EPS to grow 19% and 30%, respectively, this year — and its stock still looks reasonably valued at 29 times forward earnings.
Trump Media is still a meme stock
Trump Media is an unusual social media company because it doesn’t disclose any traditional growth metrics like its MAUs or ARPU. But according to SimilarWeb, Truth Social only served 113,000 active users in April — which represented a 19% decline from the previous year. That basically makes it a speck of dust compared to Pinterest.
In 2023, Trump Media only generated $4.1 million in revenue but racked up a net loss of $58.2 million. That’s an alarming situation for a company that ended the year with just $2.6 million in cash and equivalents. And with a market cap of $6.55 billion, it’s valued at more than 1,600 times its trailing-12-month sales.
Trump Media’s first-quarter report will also face severe delays because the US Securities and Exchange Commission (SEC) just permanently suspended its auditor, BF Borgers CPA PC, due to consistent issues with its auditing standards.
All of these issues seem to make Trump Media a doomed investment. However, its price is still likely to be propped up by short-term traders and Trump supporters who are buying the stock as an investment in the former president. In other words, it’s a meme stock that is being driven by the news instead of by its actual growth.
The obvious winner: Pinterest
Pinterest is clearly a better buy than Trump Media. It serves more users, it’s growing faster, and its stock is cheaper. Trump Media’s Truth Social is shrinking, it’s obfuscating its core growth figures, it’s deeply unprofitable, and it’s absurdly overvalued.
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