Pinterest surges 20% as Elliott moves in, Susquehanna upgrades, citing new catalysts
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Pinterest (NYSE:PINS) shares surged nearly 20% on Tuesday after the company reported in-line second-quarter results and issued guidance that assuaged investor fears, while also receiving praise from its largest shareholder, activist hedge fund Elliott Management.
These events led to investment firm Susquehanna upgrading the social network, noting that while the fundamentals are still "choppy," the company has several new catalysts that create a "favorable risk reward."
Analyst Shyam Patil moved the firm's rating on Pinterest (PINS) shares to positive from neutral, and raised the price target to $35 from $22, noting that there is still a lot of work to be done, but new Chief Executive Bill Ready and Elliott should provide some hope. 
Patil noted that Ready laid out his vision on Pinterest's (PINS) earnings call, which includes broadening the advertise base, diving further into product strategy and boosting engagement, as the company looks to make its platform more "shoppable." 
"Activist fund Elliott Management has become PINSâs largest investor and yesterday issued a statement affirming its conviction in PINSâs opportunity and Readyâs ability to execute on that opportunity," Patil wrote in a note to clients, adding that "these new developments can improve execution and be positive catalysts for the stock."
Patil also noted that the company's second-quarter was "better than feared," after recent reports from Snap (SNAP) and Meta Platforms (META) added to increased concern. 
Pinterest (PINS) was also able to keep engagement steady throughout the quarter, as global monthly active users came in at 433M, roughly 2M above Susquehanna's estimate, amid concerns about Google's (GOOG) (GOOGL) algorithm update in November, pandemic unwind, competition from ByteDance's (BDNCE) TikTok and other video-centric apps. 
"Despite the headwinds, engagement holding steady throughout 2Q is a modest success given engagement typically declines throughout 2Q due to seasonality," Patil explained, while adding that monthly active users should "tick up modestly" in the third and fourth quarters.
On the company's earnings call, Chief Executive Ready said he viewed Elliott's investment in Pinterest (PINS) as "a vote of confidence in Pinterest's future."
Analysts are largely cautious on Pinterest (PINS). It had an average rating of BUY from Seeking Alpha authors, while Wall Street analysts rate it a HOLD. Conversely, Seeking Alpha's quant system, which consistently beats the market, rates PINS a HOLD.