According to CNBC, Pinterest shares plummeted as much as 15% on Tuesday after the company reported third-quarter financial results that missed earnings expectations and provided disappointing guidance. The company posted $92.11 million in net income, up 201% from the same period last year, with revenue growing 17% year-over-year. Pinterest did beat user expectations, reaching 600 million global monthly active users compared to projections of 590 million. However, the company’s fourth-quarter revenue outlook of $1.31 billion to $1.34 billion fell short of Wall Street’s $1.34 billion expectation. Third-quarter sales in the U.S. and Canada came in at $786 million, missing estimates of $799 million, while global average revenue per user was $1.78 versus the projected $1.79.
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The Bigger Picture
Here’s what’s really interesting about this drop. While Pinterest was struggling, other tech giants were absolutely crushing it in the digital advertising space. Meta reported 26% revenue growth with $51.24 billion in Q3 sales. Amazon’s ad business grew 24% to $17.7 billion. Even Alphabet saw nearly 13% advertising growth to $74.18 billion. And Reddit? They posted a massive 68% revenue jump to $585 million. So basically, while the entire digital ad market is booming, Pinterest seems to be losing ground to competitors.
The AI Question
CEO Bill Ready keeps talking about their AI investments paying off, calling Pinterest an “AI-powered shopping assistant for 600 million consumers.” But here’s the thing – if your AI investments are really working that well, why are you missing revenue targets when everyone else is beating them? It feels like Pinterest might be falling into the classic tech trap of talking big about AI while the actual business fundamentals aren’t keeping up. The company did beat EBITDA expectations with $306 million versus $295 million projected, but that’s cold comfort when your stock is down 15%.
What Comes Next
So where does Pinterest go from here? They’ve got the users – 600 million monthly actives is nothing to sneeze at. But converting those users into revenue seems to be the real challenge. The fact that they’re missing on average revenue per user while competitors are thriving suggests they’re either not monetizing effectively or facing stiff competition for advertising dollars. I’m curious whether this is a temporary stumble or a sign of deeper problems. With holiday shopping season approaching, Q4 will be crucial – if they can’t hit their conservative guidance during the biggest spending period of the year, investors are going to get really nervous.
