Pinterest Q1 Revenue Beats Expectations; Goldman Sachs Maintains Buy and Raises Target Price to $28

Overview

This is a performance review report by Goldman Sachs on Pinterest (PINS) for the first quarter of 2026. The report suggests that the company performed exceptionally well in terms of revenue, profitability, and user growth during the first quarter, with AI-driven advertising products and the implementation of its low-funnel advertising strategy yielding positive results. Given the outperformance against expectations and confidence in the medium- to long-term growth strategy, Goldman Sachs maintains its ‘Buy’ rating and increases its 12-month target price from $22 to $28, representing a 34.3% upward potential.

Core views

Strong revenue and user performance: Pinterest's total revenue for Q1 amounted to $1.008 billion, exceeding both GS ($965 million) and VisibleAlpha’s market consensus estimates ($951-$971 million), with Q2 guidance also surpassing expectations. This performance can be attributed to sustained healthy trends in user growth and engagement, reaching an MAU of 6.31 billion (up 11% year-over-year), where the Z-generation user base and AI-driven platform search were key drivers of growth. Additionally, standout performances from small and medium-sized businesses, mid-market enterprises, low-funnel advertising objectives, and financial services sectors effectively offseted headwinds from large retail advertisers' brand ad spend reductions at the beginning of the year. Strategic execution and improved profitability: Management demonstrated optimism and strong execution capabilities in executing their growth strategies, including diversification of the advertiser base, leveraging AI-driven automation, transitioning towards low-funnel/effectiveness-oriented advertising goals, as well as increasing participation and monetization through multimodal search. Driven by higher-than-expected revenues, Pinterest achieved an adjusted EBITDA of $207 million (a 20.5% margin) in Q1, which successfully covered recent costs such as investments in AI, reshaping marketing strategies, and integrating TVScientific. Shareholder returns and revised forecasts: In Q1, the company repurchased shares amounting to about $195 million, leaving a remaining authorization of approximately $200 million, reflecting a proactive approach to capital return. As a result, Goldman Sachs upgraded its 2026 revenue forecast to $4.808 billion (previously $4.701 billion) and slightly adjusted the EBITDA forecast to $1.394 billion (from $1.369 billion); however, Q2 EBITDA was downgraded to $272 million (from $292 million), mainly due to ongoing investments affecting margins.

Analysis framework

Goldman Sachs's analysis centers on the degree of strategic execution accomplishment. Firstly, it dissects the structural drivers behind the revenue beat, highlighting how growth from smaller advertisers and low-funnel advertising offsets headwinds from larger retail advertisers. Secondly, it tracks user engagement metrics, attributing MAU growth to specific factors like the Z-generation demographic and AI search functionalities. Then, it verifies the practical application of management strategies related to AI, effectiveness-based advertising, and commercialization efforts. Finally, it comprehensively evaluates profitability and EBITDA elasticity based on revenue performance and investment pace before adjusting earnings forecasts and valuation multiples. Valuation-wise, a hybrid method combining EV/Sales and modified DCF (discounting EV/GAAP EBITDA using CAPM-derived discount rates) each accounting for 50% weight was employed. The target price increased from $22 to $28, specifically involving parameters such as applying a 3.0x EV/Sales multiple (up from 2.5x) to next-to-next year projections, and utilizing an 18.5x EV/GAAP EBITDA multiple (up from 16.0x) applied four years forward (NTM+4), discounted back three years using a 12% rate derived via CAPM (3% risk-free rate + 1.3 beta + 7% equity risk premium).

Methodology notes

• Valuation MethodEV/Sales Valuation

  EV/Sales and EV/Sales-to-Growth Multiples

  EV/Sales (Enterprise Value to Sales) is commonly used for high-growth internet companies not yet achieving stable profits. To account for differences in growth rates, analysts often apply EV/Sales-to-Growth ratios (multiples divided by revenue growth rates) for standardized comparisons. In this case, Goldman Sachs maintained an approximate 0.24x ratio but increased the absolute multiple to 3.0x as predicted growth accelerates.

• Valuation MethodDCF Cash Flow Discounting

  Modified DCF and Terminal Value Based on EV/EBITDA Multiple

  The modified DCF approach here does not directly predict perpetual free cash flows. Instead, it calculates future enterprise value using an NTM+4 year EV/GAAP EBITDA multiple (18.5x) and discounts it back to present value using a CAPM-derived discount rate (12%). This method suits firms in their investment phase with significant short-term profit fluctuations.

• Quantitative/Factor/Portfolio TheoryCAPM Capital Asset Pricing Model

  CAPM Discount Rate Calculation

  CAPM determines the cost of equity capital. Here, a 3% risk-free rate, 1.3 beta (indicating individual stock volatility exceeds market average), and 7% equity risk premium are used to derive a 12% discount rate for converting future cash flows into present values.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• PINTEREST INC (PINS.US)

  Direct Coverage Target, Benefiting from Strategic Execution and Revenue Beat

  Strengths

  Steady User Growth, Advertiser Base Diversification, Effective AI and Results-Oriented Advertising Strategies, Proactive Capital Returns

  Weaknesses

  Continued Headwinds from Large U.S. Retail Advertisers, Q2 EBITDA Margin Decline Compared to Previous Quarter, High Equity Compensation Costs

  Risks

  Macroeconomic Pressures, Intensifying Competition, Slowing User Growth Rates, International Monetization Falling Short of Expectations, Regulatory Privacy Scrutiny

Key data

• Q1'26 Total Revenue$1.008 BillionExceeds GS estimate by 4%, beats market consensus, and grows 18% year-over-year
• Q1'26 Adjusted EBITDA$207 MillionExceeds GS estimate by 15%, achieving a 20.5% profit margin; surpasses market estimate by 17%
• Q1'26 MAU (Monthly Active Users)6.31 BillionGrows 11% year-over-year and 2% sequentially, meeting GS expectations
• Q1'26 Share Repurchase AmountApproximately $195 MillionRemaining repurchase authorization is about $200 Million
• 12-Month Target Price$28Raised from $22, implying a 34.3% upside
• 2026 Annual Revenue Forecast$4.808 BillionUpgraded from $4.701 Billion

Impact & implications

The report posits that Pinterest's long-term growth is anchored in shoppable content, direct response / low funnel ad budgets, and scaled monetization opportunities from partnership relations, expecting medium-double digit compound revenue growth along with expanding profit margins. Medium-term investor focus will center on the trajectory of revenue growth, particularly how effectively the company's strategy mitigates macroeconomic headwinds and competitive pressures. Additionally, Goldman Sachs assigns M&A rating of 3 (low likelihood of acquisition), indicating current valuations are primarily based on internal fundamentals rather than merger or acquisition expectations.

Risks

• Ongoing or worsening macroeconomic headwinds leading to reduced ad spending growth/budget pressure
• Declining or unstable monthly active user (MAU) growth rates
• Delayed or undersized international monetization timelines and scales due to competition, economic conditions, geopolitical issues, or sales execution challenges
• Execution risks in social commerce/full-funnel commercialization opportunities (due to insufficient adoption by advertisers/users or poor internal execution)
• Increased regulatory scrutiny regarding user data/privacy for media and e-commerce platforms
• Fluctuations in global macro environments and investor appetite for growth stocks

What to watch

• Medium-term revenue growth trajectory and extent to which strategic execution counteracts macroeconomic and competitive headwinds
• Implementation progress of the Performance+ ad product and expansion of the advertiser base
• Impact of AI-driven product innovations on engagement and cost efficiency
• Amplitude of Q2 EBITDA margin decline compared to previous quarters and subsequent trends toward improvement