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Stocks of Pinterest Take a Hit After Revenue Misses

February 9, 2024
minute read

Pinterest Inc. experienced a decline in its stock during after-hours trading on Thursday following the release of its financial results, which included a revenue miss and uninspiring guidance.

For the fiscal fourth quarter, Pinterest reported a net income of $201.2 million, or 29 cents per share, a notable increase from the year-ago quarter's net income of $17.5 million, or 3 cents per share. Adjusted earnings stood at 53 cents per share. Despite these positive figures, revenue saw a modest improvement of 12% to $981.3 million, compared to $877.2 million in the same period the previous year.

The market response was immediate and volatile, with shares initially plunging about 23% after the report was released, then recovering to a slight gain. However, by the end of the after-hours session, the stock was down 9%.

Pinterest Chief Executive Bill Ready commented on the strong fourth quarter, marking the conclusion of a transformative year for the company. The global monthly active users reached an all-time high of 498 million, reflecting an 11% increase year over year, largely driven by Gen Zers.

During a conference call with analysts, Ready revealed that the company is actively developing an AI-based automated advertising system. Additionally, he announced Google's upcoming collaboration as a third-party ad-integration partner, following Pinterest's existing partnership with Amazon.com Inc.

Looking ahead, Pinterest projects first-quarter revenue between $690 million and $705 million. Analysts surveyed by FactSet anticipate $702 million in first-quarter revenue. Despite a dip in food and beverage advertising during the fourth quarter, Chief Financial Officer Julia Brau Donnelly expressed confidence in a good start for the first quarter.

Advertising spending played a crucial role in the earnings report, echoing trends observed in reports from other major players such as Meta Platforms Inc., Alphabet Inc.'s Google, and Snap Inc. Meta and Google reported significant advancements in ad revenue, setting a high bar for Pinterest and other industry players.

Insider Intelligence principal analyst Jeremy Goldman noted that Pinterest's Q4 numbers, while solid, might face scrutiny from the market, especially in the aftermath of Meta's impressive performance the previous week.

Over the last year, Pinterest's stock has surged by 64%, outpacing the broader S&P 500 index, which increased by 22%. The market's response to Pinterest's recent financial results reflects the heightened expectations and competitive landscape in the digital advertising space.

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