Pinterest said it will repurchase shares with this new investment
Social media stock Pinterest Inc (NYSE:PINS) is enjoying a pre-market pop today, up 5.3% to trade at $18.40 following a major backing from Elliott Investment Management. The firm took a $1 billion stake, with the company saying it plans to use the funds to buy shares from its $3.5 billion repurchase program.
PINS has suffered a steep, long-term pullback on the charts. Shares fell to a nearly six-year low of $13.84 on Feb. 13, after the company forecast first-quarter revenue below estimates. Today’s pop should put the equity back near the site of their pre-earnings close and shave off some of its steep, 52.7% year-over-year deficit.
Despite its long-term underperformance, analysts are split on Pinterest stock. In fact,17 of the 35 brokerages in question sport a “hold” recommendation, leaving plenty of room for bull notes moving forward.
Options are looking affordable, as PINS sports a Schaeffer’s Volatility Index (SVI) of 53%, which stands in the 19th percentile of its annual range. In other words, near-term option traders are pricing in relatively low volatility expectations.
Plus, Pinterest stock’s Schaeffer’s Volatility Scorecard (SVS) comes in at 87 out of 100. In other words, shares have consistently realized higher volatility than its options have priced in over the past 12 months.