Social media stocks have taken a beating lately, and they have had a rocky start to 2022. Pinterest (NYSE:PINS) was once a pandemic darling, but the stock has been declining for the past few months. We spent hours on the social media app while in lockdown, but interest soon started to fade. PINS stock made the most of the pandemic and went as high as $89 in February 2021, but it has been declining ever since. As lockdown restrictions ended and the pandemic momentum slowed, the stock continued to decline.

The company reported fourth-quarter results that beat analyst estimates, which led to a rise in PINS stock. It is close to the 52-week low, making this a good opportunity to own the social media stock. Pinterest may be down today but it is not out of business. It has solid potential to grow in the coming years, and the revenue numbers show that the company is doing something right. With that in mind, let’s dig deeper into the investment case for PINS stock.

Strong Fundamentals

Pinterest reported revenue of $847 million with adjusted earnings of 49 cents a share. Revenue rose 20% from the same quarter last year. On top of that, the company managed to reach the first full year of profitability under GAAP, which is noteworthy.

Global monthly active users declined 6% and reached 431 million, but global average revenue per user increased 23% to $1.93, and the U.S. average revenue per user hit $7.43, which is a 25% increase. As long as Pinterest manages to enjoy a high revenue per user, there is no stopping its growth momentum. The company’s growth story is highly overlooked and its potential underestimated.

It is important to note that the company managed to report solid revenue numbers despite the decline in user base. Since the third quarter, the company has seen a dip in user growth, and this has impacted PINS stock adversely. But one should not judge the fundamentals of the company solely on the user numbers. The company has strong projections for this quarter, and I believe it has solid plans to achieve them.

Investors must understand that Pinterest has value beyond the pandemic when deciding to invest in the company. The company did make the most of the pandemic but look at the big picture. What many investors are failing to see is the rise in the average revenue per user and solid revenue growth despite the pandemic, supply chain issues and overall sentiment of the investors.

The Bottom Line on PINS Stock

Several analysts are bullish on PINS stock. Brad Erickson, RBC Capital analyst, has a price target of $34 with a “sector perform” rating. The analyst stated that the results were “better than feared.” Further, UBS analyst Lloyd Walmsley has a price target of $35 with a “neutral” rating after the shares beat the fourth-quarter earnings beat. BofA analyst Justin Post has a price target of $46 with a “neutral” rating on the stock.

The stock is trading below $30, which makes it a solid buy. PINS stock could generate returns for investors at the end of the first quarter of 2022, when the stock could pick up the pace. However, the execution of marketing strategies is important, and it will be interesting to see how the company works to attract and retain users in the coming months.

Buy PINS stock on the dip.

On the date of publication, Vandita Jadeja did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Vandita Jadeja is a CPA and a freelance financial copywriter who loves to read and write about stocks. She believes in buying and holding for long term gains. Her knowledge of words and numbers helps her write clear stock analysis.