Pinterest shares tank 20% on earnings miss, weak guidance

Pinterest experienced a significant decline in its stock value, plummeting by nearly 20% in after-hours trading on Thursday, following the release of its fourth-quarter earnings report. The social media platform revealed that it fell short of earnings expectations, leading to concerns about its future performance. The company projected first-quarter revenue to be between $951 million and $971 million, which is below analyst predictions of $980 million. While Pinterest's fourth-quarter sales increased by 14% compared to the previous year, its net income took a steep decline, reported at $277 million—an 85% drop from $1.85 billion during the same quarter last year, which had included a deferred tax benefit. Sales in the U.S. and Canada reached $979 million, surpassing StreetAccount's estimate of $973 million. However, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) amounted to $541.5 million, falling short of the $550 million anticipated by analysts. Notably, Pinterest's global monthly active users surged by 12% year-over-year, hitting 619 million, which exceeded Wall Street's expectations of 613 million. In a statement, CEO Bill Ready emphasized the platform's growth in user engagement, saying, "Users are at all-time highs and overall engagement continues to grow." He also mentioned that the company is concentrating on refining its sales strategies to better align monetization with the commercial intent observed on the platform. Earlier this year, Pinterest announced plans to lay off nearly 15% of its workforce and downsize its office space to refocus resources on technical teams dedicated to developing AI-powered products. Following these announcements, the company terminated employees who had created a tool to measure the layoffs, prompting CEO Ready to address the matter in a company-wide meeting, where he highlighted the importance of constructive dialogue over obstructionist behavior.