PINS is a top 10 buy; despite competitive disadvantages and slowing growth, the low valuation (forward P/E 7.8) provides >85% upside to a $35 fair value.

Pinterest stock price is experiencing a decline in performance. Whether you look at its performance in 2026, it is down 27%, or if you look at the past twelve months, it is down even more than that.

It is reasonable to feel that Pinterest's operations are under pressure. I also own shares in MetaPlatforms and Pinterest.

One of the things that made me optimistic about Meta is its ability to invest in artificial intelligence on a large scale and integrate it into its business operations, enhancing its competitive advantage against smaller rivals like Pinterest.

Therefore, Pinterest investors are expecting a significant slowdown, prompting them to sell the stock and give it a very cheap valuation .

This raises a question for many investors: Does this make Pinterest a buying opportunity or a stock to get rid of because it is about to fall further?

We can see that the stock price performance has already absorbed these concerns from investors. Since the beginning of the year until now, the stock has fallen by 26.8%. Looking at its performance over the course of a year, it has declined by more than 41%.

Looking at it over the past 5 years, it has decreased by more than 62%. It was one of the worst performing stocks in the market .

I only recently bought Pinterest shares , and I'm already in a loss position. I bought it at approximately $34 per share, then strengthened my position when the share price fell below that.

As I mentioned, when I follow a company and own shares in it, I focus a lot on the risks, right? I look at the negative aspects a lot, and I mentioned that one of the biggest negatives I see right now is the competitive disadvantage.

The gap between Pinterest and Meta is getting worse for Pinterest. Simply put , they don't have the scale to invest in artificial intelligence the way Meta does.

I have not seen Pinterest take advantage of its smaller size to be more agile and lightweight to counter the scale advantage that Meta has proven. Therefore, I do not see an effective response from Pinterest.

But what encourages me is the growth in revenue at Pinterest. It shows significant revenue growth at a double-digit rate, something I would n't expect to see from a company that is losing its competitive edge.

In its most recent completed fiscal year, Pinterest's revenue increased by 16.6%. In 2024, revenues increased by 18.5%.

To put these numbers in context, if we look at the advertising industry as a whole, it grew at a high single-digit rate during 2024 and 2025. So, Pinterest's business grew at more than double the growth rate of the industry it operates in.

Consequently, it is gaining a larger share among advertisers who allocate more of their budgets to Pinterest than to the rest of the available categories in the advertising industry.

Looking ahead, Wall Street analysts expect Pinterest to continue gaining a share of the advertising industry, but the pace of that growth will slow down. Well, for 2026 they are forecasting 16% growth, which is almost double the industry average, but for 2027 there is a noticeable slowdown to 13%, and then to 11.5% in 2028.

These are still revenue growth rates that beat the industry for Pinterest, and as a shareholder, I would be very happy if the company achieved this level of growth in 2027 and 2028.

Personally, I don't expect this level of growth. I think this is an exaggerated estimate of Pinterest's growth in these two years. I estimate Pinterest's revenue growth rate to be in the high single digits for 2027 and 2028.

I expect Pinterest to grow between 7 and 10% over the next two years, and I would be pleased if Pinterest actually achieved revenue growth within my estimate of 7 to 10%.

But analysts on Wall Street are predicting better growth than I am. Pinterest's valuation is cheaper than I expected for a company that is expected to grow at levels seen by industry experts and at levels I anticipate, which are lower than the expectations of the experts I referred to who are predicting growth in the lower double digits .

I expect high single-digit growth. However, even with my high single-digit valuation, I feel that a forward P/E ratio of 7.8 is surprisingly cheap for a company with these growth prospects, these profit margins , and in this industry.

But with Pinterest, we don't see that, do we? There is no acceleration in growth. In fact, the company has not yet reached its peak revenue per employee, which was approaching $1 million on Pinterest, and is now at $850,000.

So , it's still below the level it reached in 2022.

So, we're not seeing those benefits, and I don't expect to see them because Pinterest doesn't have the scale to invest in AI at the level Meta reached.

Therefore, I expect to see a widening of this gap here. I expect to see a growing gap between Meta and Pinterest in terms of competitive advantage. Therefore, I incorporated a lot of this pessimism into my assessment and expectations for Pinterest.

I am surprised to see that despite incorporating these pessimistic growth forecasts, which fall below industry experts' estimates, and the higher estimated risk , I have adjusted this in my Pinterest risk factor, raising the beta to take the higher risk into account.

So, I incorporated a lot of those expectations into my assessment of Pinterest, and I still see a significant upside opportunity here that exceeds 85%. I calculated the fair value of Pinterest stock at $35, while the current market price is $19.

Therefore, I see a significant upside opportunity here despite my expectations being below the industry average.

Therefore, I will reaffirm my ranking of Pinterest as one of the top 10 stocks, and I updated that on September 30th. I am fully convinced of this classification.

Although it has been one of the worst performing companies over the past nine to twelve months , and the past five years, the valuation looks attractive enough, and growth estimates have been sufficiently reduced.

If Pinterest achieves any growth close to what I expect, which is a high single-digit percentage, I believe it will deliver excellent returns for shareholders in the long run.