2 Tech Stocks to Buy on the Dip Right Now News ad

Every earnings season has its share of selling news that penalizes good stocks despite them posting strong earnings reports. The market is known to overreact because selling begets more selling, just as buying begets more buying. When the smoke clears, some stocks become dip buying opportunities if you look under the hood and look beyond the initial reaction.

Here are two computer and technology stocks that offer dip entries as the market overreacts to selling news.

Pinterest: Growing up, not showering

Social commerce platform Pinterest Inc. NYSE:PINS The company’s shares fell 14% on the back of a strong earnings report for the third quarter of 2024. Pinterest had a bad time reporting earnings after the bar was raised due to strong profit performance from social media platforms. Meta Platforms Inc. NASDAQ: META, Alphabet Inc. NASDAQ: GOOGLE and even snap inc. New York Stock Exchange: SNAP.

Strong growth and profit in the third quarter

In the third quarter of 2024, Pinterest reported earnings per share of 40 cents, beating the consensus estimate by 6 cents. GAAP net income was $31 million and adjusted EBITDA was $243 million. Revenue grew 18% year over year to $898.37 million, beating consensus estimates of $896.89 million. Global monthly active users (MAU) grew 11% year over year to a record 537 million.

AI is an investment based on the principle of “pay now, get later”

Pinterest continues to invest in artificial intelligence capabilities to improve user engagement and improve their shopping experience. Average revenue per user (ARPU) grew 5% year over year to $1.70. Pinterest is unique in that people come to the site to discover new ideas and often spend money on products that embody them. It’s a simple soft sell that naturally materializes and advertisers are interested in it.

However, Pinterest noted that ad prices have decreased due to monetization efforts in international markets. Additionally, the international ARPU of $1.70 is just a fraction of the US and Canada ARPU of $7.31. Adjusted EBITDA margin fell by 150 bps. is the result of investments in artificial intelligence.

Here’s How AI Drives More Engagement and More Ads

The investment will pay off as new capabilities will help increase user engagement and improve the customer journey. Pinterest continues to expand its Gen Z user base, who are most likely to be positively impacted by AI improvements as they are true digital nomads. 66% of weekly Gen-Z pinners say Pinterest is their first place to shop, up 54% year-over-year.

AI models generate 400 billion predictions per second

Using billions of user interactions such as clicks, saves and searches, Pinterest’s artificial intelligence models generate more than 400 million predictions to develop personalized recommendations that allow them to discover new trends and new brands. This has resulted in a 300 bps improvement in practice so far.

This has directly led to an increase in the share of advertising budget spent by brands and agencies. Pinterest could also become an acquisition target for a larger e-commerce player or social media platform looking to bolster its social commerce segment.

Block Inc: Multiple Ecosystems Generating Cumulative Financial Impact

Digital ecosystem holding Block Inc. New York Stock Exchange: SQ The stock initially fell 11% following its third-quarter earnings report but quickly recovered, helped by rising spot bitcoin prices. The block consists primarily of two ecosystems: Square’s payment processing network of merchants and merchants, and CashApp’s peer-to-peer (P2P) remittance network with financial services including digital banking, digital lending with Cash App Borrow service, digital wallet, debit card, Bitcoin trading and Afterpay, a buy now, pay later (BNPL) service that competes with Affirm Holding Inc. NASDAQ: AFRM.

The money app ecosystem continues to be a growth engine

Block reported third-quarter 2024 earnings per share of 88 cents, in line with consensus estimates. Revenue grew 6.4% YoY to $5.98 billion, below consensus estimates of $6.24 billion. Gross payment volume (GPV) increased 7.5% YoY to $59.6 billion. US Markets GPV grew 4.9% YoY and international markets grew 20% YoY. Cash App Card active users grew 11% year over year to 24 million.

Impressive postpaid rates discovered

Afterpay users who have been on the platform for five years or more make an average of 31 transactions per year, compared to 4X for those who joined last year. This highlights how customers become more engaged with Afterpay as they use the service and become familiar with it over time.

Afterpay also generated more than 460 million merchant engagements and was a key driver of ad revenue for Block, driven by 138 million consumer visits to the Afterpay app. Block shares could soar in 2025 thanks to a Bitcoin rally and the holiday shopping season, boosting Afterpay’s business.

Block CEO Jack Doherty commented on the combined effect in his letter to shareholders: “We believe our approach to lending is unique in the industry. Square Loans, Afterpay and Cash App Borrow are powerful ideas that work for customers and investors.

Collectively, we believe they provide Block with a lending ecosystem that can expand access to multiple types of customers and expand both sides of the counter, all at a scale unmatched in the industry.”

You’ll want to hear this before you consider Block.

MarketBeat tracks Wall Street’s top-rated and best-performing analysts daily and the stocks they recommend to their clients. MarketBeat identified five stocks that top analysts were quietly telling their clients to buy now, before the broader market caught on… and Block wasn’t on the list.

While Block currently has a Moderate Buy rating among analysts, the top-rated analysts consider these five stocks to be Strong Buys.

View five stocks here

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