Pinterest shares plummeted in extended trading after the company issued a weaker forecast and missed on revenue. The revenue was $981 million vs. $991 million expected, and earnings were 53 cents per share, adjusted, vs. 51 cents per share expected. However, the company revealed a new Google partnership and the shares rebounded slightly to $37.82, a 7% decline.
Monthly active users in the fourth quarter rose 11% to 498 million, topping analyst estimates of 487 million. According to Pinterest’s forecast, its first-quarter revenue will be between $690 million and $705 million, representing year-over-year growth of 15% to 17%, leading to concerns. The digital advertising market is showing recovery, with major companies like Meta, Alphabet, and Amazon, growth their ad businesses by double digits in the fourth quarter. However, not all online ad companies are seeing benefits, as Snap reported fourth-quarter sales growth of only 5% and issued weak guidance, leading to a 35% drop in share price.
In light of the broader digital advertising market’s recovery, companies like Pinterest are experiencing negative impacts and generating lower-than-expected revenues. The Pinterest Q4 earnings report showed a substantial revenue increase of 12% year-over-year and a net income of $201 million, a significant improvement from the previous year. The company has attempted to counteract its forecast with a new Google partnership to restore confidence in shareholders. Despite the challenges faced by Pinterest, it is clear that the rapidly evolving digital advertising landscape and fluctuating consumer behavior are impacting the growth and profitability of online advertising platforms like Pinterest.