Ad load update: PINS continues higher; RDDT down m/m

Research evidence excerpt

Ad load update: PINS continues higher; RDDT down m/m

s are

below the peer group due to high market penetration and sheer size but in our view reasonable for the long-term secular growth

and compounding earnings power of the core business.

Risks to rating and price target

These include regulation, user privacy mandates implemented by either governmental agencies or competing ecosystem

providers, competition from existing social platforms or potentially other large technology players, public perception that could

lead to a decline in usage, and a macroeconomic downturn.

Pinterest, Inc.

Valuation

We believe PINS deserves a lower multiple to the group given the story has become too lacking in either a product cycle, user

engagement driver, or other clear source of upside to justify a premium multiple. Our price target is attributable to the fact

that despite significant platform upgrades including mobile deep linking, direct links, expanding retail media partnerships, and

Performance Plus, an inflection in monetization has not followed suit, and the current roadmap lacks a compelling "what's next"

catalyst. To the degree that the company is able to grow SMB wallet share and in lieu of some other user engagement or content

growth driver, there would likely be upside to our valuation. Our $23 price target is based on 11x EV/’27E EBITDA and supports

our Sector Perform rating.

U.S. MAU declines, slow pace of advertisers recognizing higher value from better conversions, slowing international user growth,

SEO traffic disruption, user churn due to waning interest, advertising churn due to less measurement signal and more inability to

prove attribution than expected, 3p partnerships drive less revenue/relevance than expected, direct links don’t drive conversion

higher.

Reddit Inc