Pinterest Stock Pops on Analyst Upgrade

Call traders are blasting the social media concern following the note

Deputy Editor
Sep 7, 2022 at 10:26 AM
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Wolfe Research today upgraded Pinterest Inc (NYSE:PINS) to "outperform" with a $28 price target, helping the shares of the social media concern rise 7.6% to trade at $23.78 at last check. In its bull note, the brokerage firm said Pinterest's new CEO should help "the company's pace of execution and progress on [long-term] initiates," and further cited "significant runway" for long-term user growth and revenue for its optimism.

Coming into today, 16 of the 19 covering analysts rated PINS a "hold," while the other three recommended a "strong buy," leaving the security open to additional upgrades. What's more, the 12-month consensus target price of  $25.59 is a 15.8% premium to last night's close, signaling room for even more price-target adjustments to roll in. 

Pinterest calls are flying off the shelves in response to the note, with 25,000 bullish bets already exchanging hands in the first hour of trading. That volume is good for double the intraday average, and well above the 5,028 puts traded so far. The most popular position by far is the weekly 9/9 25-strike call, where new positions are being opened, followed by the 23-strike call from the same series.

This penchant for calls is nothing new. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Pinterest stock's 10-day call/put volume ratio of 4.10 ranks higher than 81% of readings from the past year, showing calls being picked up at a much faster-than-usual clip. 

What's more, short interest has taken a 33.2% haircut in the last month, and the shares sold short account for 5.3% of the stock's available float. It would take nearly two days to buy back these bearish bets, at PINS' average pace of trading. 

On the charts, Pinterest stock continues to face stubborn resistance at the $24 mark, which has rejected the equity multiple times since early August. In addition, the security's 180-day moving average continues to loom overhead. However, things could be turning around, as PINS just logged its second-straight monthly win after losing 12 straight, and has already managed to add 29.2% this quarter.


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