Pinterest surges after earnings. Why Jim Cramer sees the stock as a long-term winner

CNBC’s Jim Cramer said Tuesday he believes in Pinterest‘s (PINS) reinvention plan, pointing to the social media platform’s strong third-quarter earnings report as evidence.

Under CEO Bill Ready, who took over in June 2022, the company is “finally” translating all its user interest into ad sales, Cramer said on “Squawk on the Street.” Pinterest’s new focus on enhancing the shopping experience is better for users and advertisers, he added. Pinterest is like a digital pinboard, where people go for inspiration on interior design, their wardrobe and more.

“This is now going to be – along with [Instagram parent] Meta – a destination for you to advertise at,” Cramer said. “It had always been a destination for you to look at and then go somewhere else because you got the idea. Now, you stay.”

Cramer’s Charitable Trust, the portfolio used by the CNBC Investing Club, owns shares of Meta Platforms (META), which also owns Facebook and WhatsApp. While Meta is much larger than Pinterest, advertising is the primary revenue source for both companies.

Shares of Pinterest surged more than 19% on Tuesday to nearly $30 apiece, after releasing better-than-expected third-quarter results Monday evening.

“This is going to be a long-term winner,” Cramer said. “This stock goes higher. It’s terrific.”

In addition to Pinterest’s 11% revenue growth in the quarter, Cramer said he also was impressed by the company’s improved profitability and expanding user base. Global monthly active users rose 8% compared with the year-ago period, to 482 million.

Pinterest’s recent ad partnership with Amazon (AMZN) — which also is owned by Cramer’s Trust — is “very smart,” Cramer said.

On Pinterest’s earnings call Monday, Ready said the company is pleased with the Amazon partnership, which was announced in late April. He reiterated that Pinterest expects the “most meaningful” revenue impact to show up starting in early 2024.