Pinterest's ad woes hurt revenue growth, shares slump
By Vansh Agarwal
(Reuters) -Pinterest Inc forecast second-quarter revenue growth below Wall Street estimates on Thursday, as the image-sharing platform grapples with a pullback in advertising spending, sending its shares down 13% in trading after the bell.
While Pinterest said that the ad market was stabilizing, it warned the market was still uncertain. Shares of peer Snap Inc fell about 18% aftermarket on weak first-quarter revenue and the company warned it could miss estimates for the second as well.
Smaller digital ad sellers such as Pinterest and Snap are losing ground in a weak economy to big tech rivals Alphabet and Meta Platforms as advertisers stick with tried and tested platforms. This follows strong pandemic era sales when advertisers spent heavily to reach customers online.
In a bid to beef up its ad business, Pinterest also announced that it was opening up third-party ad demand, which would allow other parties to deliver ads on its platform. It announced Amazon as its first partner, as it looks to bring more brands and products onto its platform.
"We believe recently appointed CEO Bill Ready is looking for ways to better leverage its platform on the e-commerce side, creating more shoppable experiences for customers that utilize the platform", said Angelo Zino, senior equity analyst at CFRA Research.
CEO Ready said that the company was using next-generation AI to bring better recommendations and ads among other things to the platform.
Global monthly active users (MAUs) on the image-sharing platform that lets users create online pinboards grew by 7% to 463 million, above estimates of 454.03 million, according to Refintiv data.
The company's revenue rose 5% to $602.58 million in the first quarter ended March 31. Analysts on average had expected $592.99 million, according to Refinitiv data.
Pinterest said it expected revenue growth in the current quarter to be in line with revenue growth in the first quarter and the fourth quarter of 2022. Fourth quarter revenue grew 4%. Wall Street was estimating growth of 6.15%, according to Refinitiv data.
(Reporting by Vansh Agarwal in Bengaluru; Editing by Shailesh Kuber)