Pinterest shares plunged about 15% in extended trading Tuesday after the company reported third-quarter results and issued a fourth-quarter revenue forecast that fell short of Wall Street expectations, wiping out the year's gains in the stock.
The company disclosed adjusted earnings per share of $0.38, compared with analysts' expectations of $0.42, and projected fourth-quarter revenue between $1.31 billion and $1.34 billion, trailing a StreetAccount projection of $1.34 billion. Revenue for the quarter rose 17% to $1.05 billion, while monthly active users reached 600 million and average revenue per user was $1.78. The mixed set of metrics — revenue and engagement growth on one hand, an EPS miss and cautious guidance on the other — appears to have prompted the steep after-hours sell-off.
Pinterest framed parts of its performance around product investment and shifting advertiser behavior. The company highlighted AI-driven product initiatives and included a statement from Chief Executive Bill Ready that the firm's investments in artificial intelligence and product innovation "are paying off." At the same time, the report noted that some Asia-based e-commerce retailers had shifted advertising budgets following the end of a U.S. de minimis duty-free import provision, a development the company singled out as affecting advertiser demand.
The results come amid an industry environment in which several larger digital advertising platforms have reported strong ad sales. Meta, Alphabet and Reddit posted robust ad performance in recent reports, and marketers continue to allocate significant budgets to TikTok as well as Meta's Instagram and Facebook, increasing competition for advertising dollars. That competitive backdrop amplifies the significance of Pinterest's guidance and advertiser-mix disclosures for investors and advertisers evaluating where to place spend.
Analysts and market participants often focus on the interplay between user growth, average revenue per user and advertiser demand when assessing social and discovery-oriented platforms. Pinterest's growth in monthly active users and its ARPU figure provide indicators of user engagement and monetization, while the EPS shortfall and narrowly beaten revenue outlook raise questions about near-term profitability and advertiser mix. The company’s emphasis on AI-driven product work suggests management sees innovation as a lever to improve monetization and fend off competition.
Investors will likely monitor how Pinterest's AI initiatives translate into ad performance and whether the company can stabilize revenue expectations amid competing platforms and shifting advertiser priorities. Advertiser behavior tied to international trade policies, such as the cited change to the de minimis duty-free import treatment, also may remain a focal point for the company’s near-term results. The immediate market reaction erased the stock's year-to-date gains, underscoring investor sensitivity to guidance and the broader advertising landscape.