Meta's social networks let consumers connect with friends, family, and coworkers or follow companies and celebrities. Meta sells VR and AR gadgets and launched Threads, a "X-like" platform, last year. Pinterest is mostly used to discuss interests, hobbies, and ideas, but its visual format makes it ideal for e-commerce transactions. Meta stock surged approximately 180% and Pinterest stock 40% in the past year.
Meta's 2022 revenue and EPS fell 2% and 38%. Apple's iOS privacy restrictions, which prevented it from harvesting data from third-party apps, strict competition from ByteDance's TikTok, and advertising industry headwinds triggered that slowdown.
Meta spent billions each quarter on its unprofitable Reality Labs unit, which develops its augmented and virtual reality technologies, as ad sales fell.
Slowing growth and rising costs spooked bulls. After overcoming those hurdles, its revenue and EPS grew 16% and 73% in 2023. Meta responded to Apple's modifications by gathering additional first-party data with its AI algorithms, expanded Reels to counter TikTok, and collected a lot of ad dollars from Chinese gaming and e-commerce companies targeting overseas clients.
It increased ad impressions to offset falling ad prices. It expanded Reality Labs as its advertising business recovered, but it still had enough cash to pay its first dividend in 2023 and increase its buyback plan by $50 billion. In 2025, analysts predict Meta's revenue and EPS to climb 17% and 34%. Its stock is near its all-time high, but at 25 times ahead earnings and 0.4% forward dividend yield, it is well valued.
Since Pinterest became unprofitable under GAAP in 2022, its revenue only rose 9%. This was a considerable decline from 52% in 2021 and 48% in 2020. Pinterest was popular for food, home renovation, family activity, and online shopping ideas throughout the pandemic. After the epidemic, many users quit, and advertising industry macro headwinds compounded the downturn. This slowing led bears to call Pinterest a fad stock.
Pinterest remained unprofitable in 2023 despite a 9% revenue increase. However, it recovered to GAAP profitability in the second half of 2023 and boosted MAUs 11% to 498 million for the year, up from 4% in 2022. Gen Z users, worldwide expansion, fresh video content, and AI-driven suggestions stabilized it. More companies released "shoppable pins" that turned Pinterest's pinboards into decentralized e-commerce marketplaces.
Analysts estimate Pinterest's sales and adjusted EPS to climb 18% and 24% in 2024 as its business stabilizes and the macro environment improves. With 28 times projected profits and no dividend, it's more expensive than Meta but may be an excellent long-term "social shopping" play.
Pinterest's company is rebounding, but Meta is stronger right now because it's more diversified, profitable, and trades at higher valuations. Meta is expanding at a comparable rate as Pinterest despite having eight times as many monthly active users, thus the social media underdog may need to grow quicker to attract growth-oriented investors.
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