What happened
Shares of Pinterest (PINS +0.53%) jumped sharply higher on Monday, rising more than 6% as of 3:30 p.m. ET.
The stock's gain follows a steep sell-off that has largely persisted since earlier this summer. The growth stock's gain on Monday suggests that some investors think the sell-off has gone too far, creating a buying opportunity. Furthermore, the gain was likely helped by a bullish day in the overall market.
Image source: Getty Images.
So what
Highlighting how bad the stock's beating has been, shares are down 42% year to date and 58% from an all-time high earlier this year. And they're down 18% in the last 30 days alone.
The tech stock's rebound may reflect some investors buying in hopes that the stock is unlikely to trade much lower -- or even better, rebound sharply. While the company's third-quarter earnings report did include some concerning news about the number of monthly active users facing some headwinds, it's not like Pinterest's business is suffering badly. Third-quarter revenue rose 43% year over year to $633 million, and the company guided for fourth-quarter revenue to grow at a rate in the high teens year over year despite being up against a tough comparison in the year-ago period, when revenue soared 76% year over year.
Also likely helping the stock on Monday was an upbeat day for many stocks. The tech-heavy Nasdaq Composite was up about 0.1%; the S&P 500 was up nearly 1.2%.
Now what
The fourth quarter will be an important quarter for Pinterest. Not only will investors look to see whether the company's monthly active user trends started improving, but they'll also hope that management's commentary about 2022 is optimistic. After all, a reopening economy should be good for advertising spend.
