Pinterest is down 22% premarket as tariffs hit earnings. Here's what's happening

Pinterest's shares plummeted by 22% in premarket trading on Friday, following the company's announcement of disappointing fourth-quarter earnings largely attributed to tariff-related disruptions. The social media platform reported revenue of $1.32 billion, falling short of analysts' expectations of $1.33 billion. Furthermore, the company experienced a dramatic 85% drop in net income, which fell to $277 million from $1.85 billion the previous year. Adjusted earnings before interest, taxes, depreciation, and amortization (EBIDTA) came in at $541.5 million, also below the anticipated $550 million. Looking ahead, Pinterest projected first-quarter sales between $951 million and $971 million, which again did not meet the analysts' forecast of $980 million. CEO Bill Ready commented that the company faced an unexpected external shock this year due to tariffs, which has left it more vulnerable to decreased advertising expenditures from major retailers. Additionally, Pinterest revealed plans in January to reduce its workforce by less than 15% and downsize its office space as part of a strategic pivot towards artificial intelligence. The company emphasized reallocating resources to AI-focused teams and prioritizing the development of AI-powered products. In light of these challenges, Citi has downgraded Pinterest's shares from Buy to Neutral, citing limited visibility from larger advertisers in the U.S. and European markets, exacerbated by tariffs and difficulties in specific sectors, including home furnishings. Analysts at Goldman Sachs echoed concerns, noting that Pinterest's revenue growth is likely to be constrained in the near term due to macroeconomic pressures and consumer spending trends. However, they remain optimistic about the company's long-term growth strategy, which focuses on diversifying its advertising partnerships and enhancing automation. Notably, the company reported a remarkable 12% year-over-year increase in global monthly active users, reaching an all-time high of 619 million, particularly among Gen Z users.