Pinterest shares plummet 15% on earnings miss, weak forecast

Shares of Pinterest plunged by 15% on Tuesday after the company unveiled its third-quarter financial results, which fell short of expectations regarding earnings per share and offered a cautious forecast for the upcoming quarter. In the latest quarter, Pinterest reported a 17% year-over-year increase in sales, while net income surged 201% to $92.11 million, compared to $30.56 million during the same period last year. However, the company's forecast for fourth-quarter revenue—projected to be between $1.31 billion and $1.34 billion—was below Wall Street's expectations of $1.34 billion. The midpoint of this outlook, $1.325 billion, raised concerns among investors. The platform also announced it achieved 600 million global monthly active users in the third quarter, surpassing the anticipated 590 million from StreetAccount. This is a notable increase from the 578 million users reported for the second quarter. Additionally, Pinterest's adjusted earnings before interest, taxes, depreciation, and amortization (EBIDTA) reached $306 million, exceeding estimates of $295 million. However, sales in the U.S. and Canada totaled $786 million, which fell short of the expected $799 million. The global average revenue per user was reported at $1.78, slightly below the projected $1.79. CEO Bill Ready emphasized the company's commitment to innovation, stating, "Our investments in AI and product innovation are paying off. We've become a leader in visual search and have effectively turned our platform into an AI-powered shopping assistant for 600 million consumers." In the wider digital advertising landscape, competitors such as Meta, Alphabet, and Amazon recently reported strong quarterly earnings, buoyed by significant investments in AI infrastructure. Meta's revenue surged 26% year-over-year to $51.24 billion, while Amazon's online advertising revenue climbed 24% to $17.7 billion. Alphabet also saw an increase in total advertising sales, reaching $74.18 billion, a notable jump from $65.85 billion a year ago. As the tech sector continues to evolve, all eyes will be on Snap, which is set to release its quarterly results on Wednesday, amid a backdrop of fluctuating performance in the digital advertising space.