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What happened

Pinterest (NYSE:PINS) shareholders outperformed a booming market in the first half of 2021, with shares rising 20% compared to the 14.4% increase in the S&P 500, according to data provided by S&P Global Market Intelligence.

That spike came on top of a huge 2020 for the social media platform, which soared over 200% last year.

Image source: Getty Images.

So what

Pinterest is still enjoying fantastic growth, with sales rising 78% in the most recent quarter. Yet it is seeing a slowdown in the U.S. market as people spend less time online as the economy and businesses reopen.

Its expansion story is far from over, though, with international markets providing plenty of lift. Pinterest is especially popular with younger users, a coveted demographic for advertisers. Promising engagement from these consumers has many investors believing the business can eventually reach a scale that’s much bigger than its current 478 million monthly active users.

Now what

The next few quarterly reports might spark more volatility in the stock in the second half of the year. Pinterest isn’t sure just how engaged its newly acquired customers will be as the pandemic threat fades, after all, and slower growth in the U.S. could pressure profits over the short term.

“While we continue to navigate COVID-19 uncertainty, we plan to stay focused on driving investments that deliver an inspirational [user] experience and measurable advertiser value,” CFO Todd Morgenfeld said in late April.

That’s the right strategy for this part of its growth story. And the good news is that Pinterest has a huge base of highly satisfied users it can work to continue inspiring with improvements to the platform. Further successes in this arena are the surest way it can grow much larger over time.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.