Can Billionaire Paul Singer Save Pinterest Stocks (PINS)?
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pinterest (NYSE:PINS) the stock is up nearly 15% today according to media reports that an activist investor Elliott Management took a 9% stake in the social media company that allows people to post photos, videos and images online.
Elliott Management is a hedge fund run by billionaire investor Paul Singer and it has a reputation for getting involved in troubled companies and helping turn them around. According to a report published in the the wall street journalElliott Management is now the first shareholder of Pinterest and has already started discussions on how to improve the social media company.
Prior to today’s rise, PINS stock was down 75% in the past 12 months to trade at $17.56 per share.
Pinterest’s main problem is that the company has been lose users exit from the Covid-19 pandemic. The number of monthly active users on the platform fell by 6% in 2021 to 431 million, raising fears that the app could lose popularity. However, it’s worth noting that Pinterest’s revenue grew 52% last year to $2.5 billion.
Yet the dwindling number of users has already caused changes at Pinterest. Last month, the company’s co-founder, Ben Silbermann, resigned as chief executive officer (CEO) and was replaced by Bill Ready, a former Google e-commerce executive. The company also toyed with subscription fees and other ways to monetize the site beyond the traditional advertising it relied on until this year.
why is it important
Elliott Management’s involvement with Pinterest could lead to new changes to the social media site or a faster turnaround. The hedge fund has a history of taking large positions in companies and then pushing for substantial changes, often leading to acrimonious relationships. In 2020, for example, Elliott Management acquired 10 million shares of Twitter (NYSE:TWTR) and pushed the social media company to grant him seats on its board of directors and undertake a $2 billion share buyback program.
Elliott Management also waged a public battle to oust Twitter CEO Jack Dorsey. Although Dorsey survived Elliot’s attack on his leadership, he stepped down as Twitter’s chief executive late last year. Because of its aggressive style, Elliott Management has been referred to in the media as “vulture capitalist”. He has been criticized for his efforts to agitate for change in public companies in the United States and abroad.
What’s next for PINS shares
Can Elliott Management turn Pinterest’s fortunes around and unlock shareholder value? Investors seem to be betting that it is possible judging by the way PINS shares are rising today. The news that Elliott Management has become Pinterest’s largest shareholder is considered good news. However, investors should keep in mind that it could take some time for positive changes to be made at the social media company, with or without the help of Elliott Management.
At the date of publication, Joel Baglole did not hold (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com publishing guidelines.