Pinterest(NYSE: PINS), one of the world's largest social media platforms, differentiates itself from its competitors in two ways. First, it encourages its users to share their interests, ideas, and hobbies by pinning images, videos, and websites to its virtual pinboards. That user-powered flywheel drives its advertising algorithms to craft more effective first-party ads than other data-mining advertising platforms.
Pinterest's platform is also a natural showcase for "shoppable" pins that allow its users to purchase products directly from its pinboards. That's why many retailers have already uploaded their entire catalogs to Pinterest's boards, and why it integrated Shopify's (NYSE: SHOP)e-commerce services into its pins for smaller merchants.
Image source: Pinterest.
Pinterest's unique combination of social networking and online shopping makes it a promising play on the nascent "social shopping" market, which Grand View Research expects to grow at a compound annual growth rate (CAGR) of 31.6% from 2023 to 2030 as it pulls shoppers away from traditional e-commerce marketplaces. It also gives Pinterest an edge against Amazon(NASDAQ: AMZN), which failed to break into that niche market with similar interest-driven platforms like Spark.
But with a market cap of $22 billion, Pinterest is still tiny compared to Amazon, which is worth a whopping $1.99 trillion and is the world's fifth most valuable company. So could Pinterest catch up to Amazon by 2050 as the social shopping market expands? Or will Pinterest run of room to grow as it saturates its niche market and loses its competitive advantages?
How fast is Pinterest growing?
Pinterest went public in 2019. From 2019 to 2023, its revenue grew at a CAGR of 28% as its number of year-end monthly active users (MAUs) rose from 335 million to 498 million. That figure climbed to 522 million by the end of the second quarter of 2024.
Pinterest experienced a major growth spurt during the pandemic's height as people spent more time looking for online shopping ideas, recipes, DIY activities, home improvement projects, and other ideas on its pinboards. But its growth cooled off as those tailwinds dissipated, and the bears claimed it was just a fad stock that would fizzle out in the shadow of bigger social media platforms like Meta Platforms' (NASDAQ: META) Instagram.
Yet Pinterest continued to grow as it expanded into more overseas markets, gained more Gen Z users (over 40% of its MAUs) to curb its dependence on older millennial users, launched more short video tools to counter TikTok, added more AI-driven recommendations, and integrated more e-commerce tools into its shoppable pins.
From 2023 to 2026, analysts expect its revenue to grow at a CAGR of 17%. They also expect it to turn profitable again in 2024 (after its two previous years of losses) and to grow its net income at a CAGR of 57% over the following two years.
How big could Pinterest become by 2050?
Pinterest already serves over half a billion MAUs, but Meta served 3.7 billion daily active users (DAUs) across its entire family of apps (Facebook, Messenger, Instagram, and WhatsApp) in its latest quarter. The global population is also expected to grow from 8.7 billion today to 9.7 billion by 2050, according to the UN's latest estimates. Therefore, Pinterest might still grow its audience to a few billion MAUs if it maintains its early mover's advantage in the growing social shopping market.
If Pinterest maintains its competitive edge, matches analysts' expectations through 2026, and continues to grow its top line at a robust CAGR of 15% over the following 24 years, it could generate $141 billion in revenue by 2050. If it's still trading at eight times its trailing sales, its market cap could soar more than 5,000% to $1.13 trillion by 2050.
But that would make Pinterest about 40% less valuable than today's Amazon. From 2023 to 2026, analysts expect Amazon's revenue to grow at a CAGR of 11% as it remains the 800-pound gorilla of the growing e-commerce and cloud markets. It also looks a lot cheaper than Pinterest at three times its trailing sales.
If Amazon matches Wall Street's estimates, maintains its current price-to-sales ratio, and grows its top line at a modest 10% from 2026 to 2050, its market cap could grow more than tenfold to $23.4 trillion. Amazon's growth might slow down or stall out before it hits that lofty target, but it should be much more valuable than Pinterest by 2050.
Focus on the growth rates instead of the market caps
Pinterest probably won't come anywhere close to matching Amazon's market cap, but it could still generate much bigger gains than the e-commerce and cloud giant. That's because Pinterest is still smaller, it's growing faster, and it has more room to expand in the niche social shopping market than Amazon. Pinterest could also eventually acquire other social media and e-commerce companies to expand its ecosystem and evolve into a more broadly diversified tech titan like Amazon. So instead of simply comparing these two companies' market caps, investors should focus on their long-term growth potential.
Should you invest $1,000 in Pinterest right now?
Before you buy stock in Pinterest, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Pinterest wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $867,372!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. TheStock Advisorservice has more than quadrupled the return of S&P 500 since 2002*.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Leo Sun has positions in Amazon and Meta Platforms. The Motley Fool has positions in and recommends Amazon, Meta Platforms, Pinterest, and Shopify. The Motley Fool has a disclosure policy.
