Pinterest stock had a huge dip as much as 15% on Thursday after the social media company provided Q4 revenue forecast. The Pinterest revenue failed to impress investors looking for a boost from the upcoming holiday shopping season. Especially at a time when bigger online ad sellers largely outperformed, sending Pinterest’s share price down in extended trading on Thursday.
The San Francisco, California-based company also announced a new stock buyback program of up to $2 billion. Pinterest canceled the September 2023 program under which $500 million were left for repurchase.
Pinterest quarterly earnings results
Here’s how Pinterest performed, according to LSEG:
Pinterest’s revenue: $898 million vs. $896 million expected
Pinterest’s earnings per share: 40 cents adjusted vs. 34 cents expected
The California-based company said Q4 revenue will be between $1.125 billion and $1.145 billion. The midpoint of the Q4 guidance, $1.135 billion, trailed analyst estimates of $1.143 billion.
Pinterest’s Performance+ suite
Pinterest released Performance+ suite in October, helping advertisers better target users with new AI tools and automation features on the platform.
“Performance+ is still in the early rollout phase, with many advertisers limiting budget shifts and adoption of new features during holiday peak period,” CFO Julia Donnelly said on a post-earnings call.
Pinterest’s low ad revenue
Pinterest CFO Julia Donnelly told analysts during an earnings call that ongoing weaknesses from food and beverage advertisers, has negatively impacted the company’s overall sales. The slump by this sector will likely continue into the Q4 quarter, she said.
The image-sharing platform faces stiff competition from the likes of Meta-owned Facebook and Instagram, which have become the go-to platforms for advertisers because of their larger user base.
Pinterest share buyback
Pinterest also said in a filing Thursday that its board authorized a $2 billion share buyback.
Pinterest’s Q3 sales rose 18% from $763.2 million a year ago.
Pinterest said it had 537 million global monthly active users in the Q3, topping analyst estimates of 532.6 million.
Pinterest’s income and expense
Net income of Pinterest grew a massive 354% year over year to $30.56 million. Its total cost and expenses for the quarter were $904 million, up 17% compared with $768 million the previous year.
Donnelly attributed Pinterest’s rising expenses to investments in research and development and hiring for employees with expertise in artificial intelligence.
How companies are performing globally
Last week, Amazon said its ads business grew 19% year over year to $14.3 billion in the third quarter, and Meta said its Q3 sales rose 19% year over year to $40.59 billion. However, Meta shares dropped slightly on weaker-than-expected user numbers and warned of a significant acceleration in its infrastructure expenses in 2025.
Ad growth was seen for Google, Meta, Amazon and Microsoft in the Q3 in 2024 and 2023. Alphabet’s advertising sales in the period grew 10% year over year to $65.85 billion. While its YouTube video unit reported ad revenue of $8.92 billion, up 12% from the previous year.
Microsoft said last week that its search and news advertising revenue jumped 18% year over year as part of its latest earnings report, but the company does not reveal that unit’s specific quarterly sales numbers.
Reddit and Snap also reported their most recent quarterly earnings last week. Reddit said that Q3 sales soared 68% to $348.4 million from the prior year. While Snapchat’s Q3 revenue grew 15% year over year to $1.37 billion.
Stock update
Pinterest share closed at a price of $29.66, a steep fall of about 13%. Overall, the S&P 500 and Nasdaq rose on Thursday, extending Wall Street’s rally, as traders weighed the latest rate cut from the Federal Reserve.
