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Q1 Earnings Spark 200%+ Rally in Pinterest Call Options

Updated: May 2

Pinterest (PINS) - ★★★ - Ranked #59 in Q2 2024 Equity SMID Rankings


Pinterest's call options for the May 17, 2024 expiration with a strike price of $39 skyrocketed more than 200% in trading today. This exceptional surge came on the heels of Pinterest's stronger-than-expected first-quarter results, which propelled the company's stock price up by a remarkable 20%.


Back in March 2024, when Pinterest was trading at $34.34, our Q2 2024 twelve-month price target for the stock was set at $39, implying an upside potential of 13% at that time.


However, today's earnings release and subsequent stock rally have significantly altered the landscape for Pinterest's options traders.


Pinterest's impressive first-quarter performance surpassed analysts' estimates on multiple fronts. The company reported non-GAAP net income of $0.20 per diluted share, well above the consensus estimate of $0.13 and marking a significant improvement from $0.08 a year earlier. Revenue for the quarter ended March 31 also exceeded expectations, reaching $740 million compared to the consensus estimate of $700 million and representing a year-over-year increase from $602.6 million.


Buoyed by these strong results, Pinterest provided an optimistic revenue forecast for the second quarter, projecting revenue between $835 million and $850 million. This positive outlook further fueled investor confidence in the social media company's prospects.


As Pinterest's stock surged 21% in Wednesday's trading session, the call options for the May 17, 2024 expiration with a $39 strike price, which were aligned with our previous price target, experienced a remarkable spike of over 200%. This exponential rise in option premiums underscores the market's renewed enthusiasm for Pinterest's growth potential and the heightened interest in capitalizing on the company's upward momentum.


With Pinterest's stellar first-quarter performance and bullish outlook, options traders have seized the opportunity to position themselves for potential further gains, driving the surge in call option prices. As the company continues to execute on its strategies and navigate the evolving social media landscape, the heightened volatility and trading activity surrounding its options contracts are likely to persist.


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The information provided in this report is for general informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. The opinions expressed in the report are our own and are subject to change without notice. We may have a position in the securities mentioned in the report, and we may buy or sell such securities without notice. Any investment decisions made based on the information in this report are solely the responsibility of the recipient. We do not accept any liability for any direct, indirect, or consequential loss arising from any use of this report or its contents.


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