TORONTO, ONTARIO, CANADA – Shares of Pinterest took a sharp dive in after-hours trading following a disappointing financial forecast and a revenue miss, the company said Thursday. While revenue rose 12% year-over-year, reaching $981 million, it fell short of the expected $991 million, according to LSEG (formerly known as Refinitiv). Additionally, adjusted earnings came in at 53 cents per share, higher than the expected 51 cents per share. This news sent the stock plummeting as much as 28% to an after-hours low of $29.40 before recovering slightly to a 14% decline.
The company reported that monthly active users for the fourth quarter rose by 11% to 498 million, surpassing analyst estimates of 487 million. However, the company’s global average revenue per user was $2, falling short of the estimated $2.05. Pinterest’s first-quarter revenue forecast of $690 million to $705 million also sparked concern, falling below the average analyst estimate of $703 million.
Amid a rebound in the digital advertising market, driven by Meta, Alphabet, and Amazon’s strong performances, Pinterest’s struggles raise questions about its position in the competitive online ad industry. While some companies, like Meta, have seen tremendous growth in digital ad sales, others, like Snap, have experienced disappointing results.
Prior to the release of its financial report, Pinterest shares had risen by 9.5% for the year, following a 53% surge in 2023. The company’s cost decrease of about 10% from the previous year was attributed to a reduction in sales and marketing expenses, stemming from a significant workforce reduction.