Why Pinterest (PINS) Shares Are Falling Today
What Happened:
Shares of social commerce platform Pinterest (NYSE: PINS) fell 17% in the morning session after the company reported second-quarter earnings results. Pinterest increased its number of users this quarter, leading to small revenue and adjusted EBITDA beats. On the other hand, its revenue guidance for the next quarter missed analysts' expectations. Overall, this was a mixed quarter for Pinterest, with the guidance likely dragging down shares.
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What is the market telling us:
Pinterest's shares are quite volatile and over the last year have had 6 moves greater than 5%. But moves this big are very rare even for Pinterest and that is indicating to us that this news had a significant impact on the market's perception of the business.
The biggest move we wrote about over the last year was 3 months ago, when the stock gained 24.1% on the news that the company reported first-quarter results with revenue exceeding analysts' expectations on higher-than-expected MAUs (monthly active users). Management called out progress with product innovation, including Direct Links, API for Conversions and automated bidding. Pinterest also previewed further product innovation around bidding and dynamic creative optimization solutions to help advertisers on the platform. Contributing to the strong topline performance, next quarter's revenue guidance came in higher than Wall Street's estimates. The big bright spot was actually the next quarter's implied operating profit guidance--while Wall Street was expecting a loss, the company guided to a nice profit instead. Overall, we think this was a really good quarter that should please shareholders.
Pinterest is down 9.9% since the beginning of the year, and at $32.67 per share it is trading 27.4% below its 52-week high of $44.98 from June 2024. Investors who bought $1,000 worth of Pinterest's shares 5 years ago would now be looking at an investment worth $1,125.
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