PINTEREST fell in late trading after forecasting weak sales for the holiday quarter, a sign the search and discovery network is struggling to keep pace with larger peers such as Meta Platforms and Snap.
Fourth-quarter sales will be US$1.13 billion to US$1.15 billion, Pinterest said on Thursday (Nov 7). The midpoint of that range is lower than the average projection from Wall Street analysts, according to data compiled by Bloomberg.
The shares fell as much as 14 per cent in extended trading on Thursday, and had fallen more than 8 per cent for the year before the report.
Pinterest has made “shoppable” content a key focus in hopes consumers will buy items they see as they browse through the site. In August, the company inked a partnership with Amazon.com that lets Pinterest users shop directly from the e-commerce company to buy items such as beauty products, clothing or home decor.
Pinterest also works with both Amazon and Alphabet’s Google to fill advertising slots and offer more direct-response ads, which push people to click on promotions or purchase items rather than just raising brand awareness.
Revenue for the third quarter rose 18 per cent to US$898.3 million in the period. That was just above the US$896.7 million that Wall Street analysts projected.
The pinboard-style site has benefited from its popularity with Generation Z, young people generally born after 1997, who are especially fond of shopping online. Pinterest averaged 537 million monthly users in the third quarter, up 11 per cent from a year ago and beating forecasts.
The San Francisco-based company is still significantly smaller than peers Meta and Snap, which compete with it for ad US dollars. This quarter, both rivals outperformed analyst’s expectations for sales and user growth, largely thanks to investments in artificial intelligence (AI).
Pinterest has also been spending on AI to better target ads and recommended photos and images to its users. Total expenses were US$904 million for the quarter, above analyst estimates of US$875.1 million. BLOOMBERG
