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Pinterest Reports Unmet Earnings, Shares Decline

Key Takeaways

Pinterest experienced a drop in its stock price on Friday following the release of its third-quarter earnings report, which revealed a net income that did not meet expectations. Although the company’s revenue narrowly exceeded forecasts, analysts indicated challenges with advertising revenue, particularly in the food and beverage sector.

Pinterest (PINS) shares experienced a notable decline on Friday morning after the company reported a third-quarter net income that fell short of analyst expectations, despite achieving a slight revenue beat.

The social media platform announced revenue of $898.37 million for the quarter, marking an 18% increase compared to the same period last year. However, this figure was a mere $500,000 above the predictions made by analysts, as per data from Visible Alpha. Even with revenue aligning with expectations, Pinterest’s net income was reported at $30.56 million, up from $6.7 million in the prior year, yet still below the forecasted $49.43 million by analysts.

Pinterest CEO Bill Ready noted, “Our AI investments are driving results by powering better personalized experiences and greater performance for advertisers, with our lower-funnel ad tools being the fastest-growing part of our business.” This reflects a strategic focus on leveraging artificial intelligence to enhance advertising efficacy on the platform.

Looking ahead, Pinterest has projected its fourth-quarter revenue to range between $1.125 billion and $1.145 billion, which falls slightly short of the analyst consensus of $1.148 billion prior to the earnings report. Analysts from JPMorgan highlighted that this anticipated revenue dip is largely influenced by ongoing challenges in the food and beverage advertising sector, which has seen a decline over recent quarters.

In light of these developments, analysts adjusted their price target for Pinterest shares from $38 to $35, expressing the view that the integration and adoption of Pinterest’s AI-powered advertising features are likely to require several quarters before showing substantial growth and usage among advertisers.

As a result of the earnings report and future projections, Pinterest shares fell more than 13% in early trading on Friday, bringing the stock down nearly 20% for the year, indicating investor concerns about the company’s short-term performance and advertising environment.

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