Pinterest stock had its second-worst day ever, with shares plummeting by 21%.
This only trails a 23.6% drop in May 2022 and follows lacklustre third-quarter earnings, during which advertising took a hit from large retailers dealing with tariffs.
The company posted earnings per share of 38 cents. While this was up from last year’s 32 cents per share, it fell short of the LSEG estimate of 42 cents per share.
“Tariff-related weakness showed up for the first time in our digital ads universe and will reinforce PINS’ lack of customer diversity for the bears and higher macro sensitivity,” RBC wrote in an analyst note.
Even more concerning was the geographic breakdown, where United States and Canada revenue hit US$786 million, falling short of StreetAccount’s US$799 projection.
Pinterest CFO Julia Donnelly said the platform "some pockets of moderating ad spend" from "larger U.S. retailers" dealing with margin pressure from tariff-related costs during the earnings call.
She also said she expects headwinds to intensify under President Donald Trump’s new trade policies.
This comes as Pinterest fights an uphill battle against social media sites like Instagram and TikTok, causing many banks to lower their price targets following the earnings report.
Following the latest earnings, Pinterest issued weak fourth-quarter guidance, expecting between US$1.31 billion and US$1.34 billion.
Despite this, 81% of analysts still maintain outperform or buy ratings.
JPMorgan remained overweight on the stock despite lowering its price target as it leans into AI technology with a new AI shopping assistant.
“We remain constructive on PINS’ user growth, deepening engagement, & overall monetisation potential,” JPMorgan’s Doug Anmuth wrote.
