Pinterest, Inc. ( PINS Quick Quote PINS - Free Report) recently disclosed definite plans to reduce operating costs as it aims to mitigate risks amid a challenging macroeconomic environment. The strategic move is part of a focused restructuring initiative to improve its margins for sustainable business practices in the wake of cut-throat competition from established players in the market. The company has decided not to renew the leases of certain office spaces and expects to significantly reduce its recurring costs by the end of 2023. The office space reduction is in concurrence with the contraction in the workforce that it had initiated last month. Pinterest reportedly slashed its workforce by about 150 employees out of a total of 4,000 by the end of December 2022. The company anticipates incurring $100 million to $125 million charges related to the restructuring plan. The restructuring plan is likely to offset higher operating expenses for expanding operations domestically and internationally, enhancing product offerings, broadening Pinner and advertiser base, expanding marketing channels and developing technology. In fourth-quarter 2022, total costs and expenses increased 31% year over year $871.3 million. While cost of sales and marketing surged 66% to $317.3 million, research and development expenses rose to $265.2 million from $240.8 million in the year-ago quarter. The increase was largely driven by ongoing investments in innovation, including mobile deep linking, entire page optimization, and improved measurement tools and stronger brand marketing campaign. However, Pinterest is increasingly establishing a unique value proposition to advertisers that could provide a competitive advantage in the long haul. It continues to dramatically improve the advertising platform, which presently appears to be one of the best ad platforms for consumer discretionary brands looking for new ways to reach customers and stretch smaller ad budgets. Pinterest’s Verified Merchants Program allows brands to create a catalog of shoppable products on the app and use special re-targeting capabilities in their ads. The acquisition of the AI-powered, high-tech fashion-shopping platform, The Yes, has further enabled it to steer the evolution of its features and merchants. Pinterest and The Yes share a common vision of making it easy for customers to find products matching their tastes and style. The company has been making continuous efforts to absorb creators’ publishing videos and live streams to make the shopping experience swift and easy for customers. The stock has gained 5.3% in the past year against the industry’s decline of 32.5%. Image Source: Zacks Investment Research
Pinterest currently carries a Zacks Rank #3 (Hold). You can see
. the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here Key Picks Arista Networks, Inc. ( ANET Quick Quote ANET - Free Report) , sporting a Zacks Rank #1, is likely to benefit from strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experience. Arista has a long-term earnings growth expectation of 14.2% and delivered an earnings surprise of 14.2%, on average, in the trailing four quarters. It holds a leadership position in 100-gigabit Ethernet switching share in port for the high-speed datacenter segment. Arista is increasingly gaining market traction in 200- and 400-gig high-performance switching products and remains well-positioned for healthy growth in data-driven cloud networking business with proactive platforms and predictive operations. Juniper Networks, Inc. ( JNPR Quick Quote JNPR - Free Report) carries a Zacks Rank #2 (Buy). It has a long-term earnings growth expectation of 7% and delivered an earnings surprise of 1.6%, on average, in the trailing four quarters. Juniper is leveraging the 400-gig cycle to capture hyperscale switching opportunities inside the data center. The company is set to capitalize on the increasing demand for data center virtualization, cloud computing and mobile traffic packet/optical convergence. Ubiquiti Inc. ( UI Quick Quote UI - Free Report) , sporting a Zacks Rank #1, offers a comprehensive portfolio of networking products and solutions for service providers and enterprises. Ubiquiti’s excellent global business model, which is flexible and adaptable to evolving changes in markets, helps it to beat challenges and maximize growth. Ubiquiti boasts a proprietary network communication platform that is well-equipped to meet end-market customer needs. In addition, the company is committed toward reducing its operational costs by using a self-sustaining mechanism for rapid product support and dissemination of information by leveraging the strength of the Ubiquiti Community.