In the after-hours trading, Pinterest saw its shares take a nosedive following the company’s announcement of a weaker-than-expected forecast and a revenue miss. The revenue was reported at $981 million, falling short of the expected $991 million as per LSEG, previously known as Refinitiv. The earnings were reported at 53 cents per share, adjusted, against the anticipated 51 cents per share. The revenue showed a 12% increase from last year, reaching $877.2 million, and the net income soared to $201 million, or 29 cents a share, from $17.49 million, or 3 cents a share, in the previous year. The monthly active users also rose 11% to 498 million, surpassing the estimated 487 million. However, the global average revenue per user stood at $2, which was lower than the projected $2.05 by analysts.
For the first quarter, Pinterest forecasts its revenue to be between $690 million and $705 million, indicating a growth of 15% to 17% year-over-year. The mid-range of this forecast, $697.5 million, falls short of the average analyst projection of $703 million. Initially, the stock plummeted by as much as 28% to an after-hours low of $29.40, before bouncing back to $35.19, representing a 14% decline. This development comes at a time when the broader digital advertising market is displaying signs of recovery, with companies like Meta, Alphabet, and Amazon experiencing substantial growth in their ad businesses. However, not all players in the online ad space are reaping similar benefits as Snap shares also witnessed a significant decline after the company’s disappointing fourth-quarter sales growth and weak guidance.
Before this report, Pinterest had seen a 9.5% increase in its shares for the year, following a remarkable 53% surge in 2023. The company’s costs have decreased by approximately 10% from a year earlier, mainly attributed to a decline in sales and marketing expenses. This decline in costs is a result of a 5% reduction in the workforce, which Pinterest undertook about a year ago.
