Shares of Pinterest rose on better-than-expected user numbers, even as revenue and earnings missed estimates and the company gave weak guidance for the third quarter.
Activist investor Elliott Management separately confirmed it is Pinterest’s lead investor and said it has “conviction in the value creation opportunity” in the company.
Here’s how the company did it.
- gains: 11 cents adjusted per share versus 18 cents per share expected, according to Refinitiv.
- Income: $666 million vs. $667 million expected, according to Refinitiv.
Pinterest said global monthly active users fell 5% from a year ago to 433 million. While that kind of drop is alarming for a social media app that relies on eyeballs to attract advertisers, analysts expected a bigger drop to 431 million.
The company’s finances were bleak, following a trend in the social media market. Facebook parent Meta, Twitter and Snap all reported second-quarter earnings that missed on the top and bottom lines, and all attributed a weak online advertising market to their dismal results.
A woman walks past a whiteboard at Pinterest’s headquarters in San Francisco’s South of Market neighborhood.
Smith Collection | Gado | Archive Photos | Getty Images
More concerning than the second quarter results was Pinterest’s comment on what to expect this quarter. The company said it estimates third-quarter revenue will rise “by a mid-point on a year-over-year percentage basis,” below analysts’ forecasts for sales growth of 12.7%.
In a letter to investors, Pinterest said economic challenges are causing marketers to tighten their grip on spending.
“The macroeconomic environment has created meaningful uncertainty for our advertising partners,” Pinterest said in the letter. The company said it saw “lower-than-expected demand from U.S. retailers and mid-market advertisers, which pulled back ad spending because of concerns. for the weakening of consumer demand”.
Pinterest said its third-quarter guidance takes into account “slightly larger foreign exchange headwinds” than last quarter.
In June, Pinterest co-founder Ben Silbermann stepped down as the company’s CEO and was replaced by Bill Ready, formerly the head of Google’s commerce unit. Pinterest’s hiring of Ready signaled a deeper push into e-commerce and online retail.
Elliott’s involvement with the company was reported in July by The Wall Street Journal, which said at the time that the firm had built up a stake of more than 9% in the company. After Pinterest’s results were released on Monday, Elliott confirmed it is the company’s largest shareholder and said it is pleased with Ready’s progress.
“As the market-leading platform at the intersection of social media, search and commerce, Pinterest occupies a unique position in the advertising and shopping ecosystems, and CEO Bill Ready is the right leader to oversee Pinterest’s next phase of growth,” Elliott said. in a statement.
friend: Profit sharing looks at Pinterest, Caterpillar and JetBlue
