What Happened?

Shares of social commerce platform Pinterest (NYSE: PINS) fell 16.8% in the afternoon session after the company reported underwhelming third-quarter earnings. Pinterest provided revenue guidance for the next quarter, which missed analysts' expectations, and its revenue growth slowed. The company also called out challenges in categories like food and beverage, where broader industry headwinds have led to reduced ad spending​. 

While EBITDA and EPS exceeded expectations during the quarter, profitability remained pressured, with ad pricing declining by 17% year on year. It seems that the market is focusing on the guidance miss, and the stock traded down as a result.

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What The Market Is Telling Us

Pinterest’s shares are not very volatile and have only had 6 moves greater than 5% over the last year. Moves this big are rare for Pinterest and indicate this news significantly impacted the market’s perception of the business. 

The biggest move we wrote about over the last year was 6 months ago when the stock gained 24.1% on the news that the company reported strong first-quarter results with revenue exceeding analysts' expectations on higher-than-expected MAUs (monthly active users). 

Management called out progress with product innovation, including Direct Links, API for Conversions and automated bidding. Pinterest also previewed further product innovation around bidding and dynamic creative optimization solutions to help advertisers on the platform. Contributing to the strong topline performance, next quarter's revenue guidance came in higher than Wall Street's estimates. 

The big bright spot was actually next quarter's implied operating profit guidance--while Wall Street was expecting a loss, the company guided to a nice profit instead. Overall, we think this was a really good quarter that should please shareholders.

Pinterest is down 22.7% since the beginning of the year, and at $28.00 per share, it is trading 37.7% below its 52-week high of $44.98 from June 2024. Investors who bought $1,000 worth of Pinterest’s shares 5 years ago would now be looking at an investment worth $1,396.

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