Pinterest shares drop on weak outlook, revenue miss

Pinterest shares plummeted in extended trading on Thursday after the company issued a weaker-than-expected forecast and missed on revenue.

• Revenue: $981 million vs. $991 million expected, according to LSEG, formerly known as Refinitiv.
• Earnings: 53 cents per share, adjusted, vs. 51 cents per share expected, according to LSEG.

Revenue rose 12% year-over-year from $877.2 million a year earlier, while net income was $201 million, or 29 cents a share, up from the $17.49 million, or 3 cents a share, it brought in the previous year.

Monthly active users in the fourth quarter rose 11% to 498 million, topping analyst estimates of 487 million. The company said its global average revenue per user was $2, lower than analyst estimates of $2.05.

Pinterest said first-quarter revenue will be between $690 million and $705 million, which equates to year-over-year growth of 15% to 17%. The middle of that range, $697.5 million, is below the average analyst estimate of $703 million.

The stock initially sank as much as 28% to an after-hours low of $29.40. It then pared some of its gains, climbing back to $35.19, representing a 14% decline.

The company’s report comes as the broader digital advertising market is showing recovery, with Meta, Alphabet and Amazon all picking up steam and growing their ad business by double digits in the fourth quarter. The data suggests that businesses are boosting spending on online promotions after cutting back in 2022 and part of 2023 over concerns about the Ukraine-Russian war and high interest rates.

But not all online ad companies are seeing the benefits. Snap shares cratered 35% on Wednesday after the company reported fourth-quarter sales growth of 5%, trailing expectations, and the company also issued weak guidance.

Prior to Thursday’s report, Pinterest shares were up 9.5% this year after surging 53% in 2023.

Costs dropped about 10% from a year ago to $785 million, largely due to a decline in sales and marketing expenses. A year ago Pinterest slashed about 5% of its workforce, part of an industrywide downsizing.

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