Pinterest Inc. underwent a downturn in its stock during after-hours trading on Thursday after the unveiling of its financial results, which encompassed a revenue miss and uninspiring guidance.
For the fiscal fourth quarter, Pinterest disclosed a net income of $201.2 million, or 29 cents per share, marking a significant surge from the net income of $17.5 million, or 3 cents per share, recorded in the corresponding quarter of the previous year.
Adjusted earnings were pegged at 53 cents per share. Despite these encouraging figures, revenue registered a modest uptick of 12% to $981.3 million, in contrast to $877.2 million in the analogous period the preceding year.
The market reaction was swift and erratic, with shares initially dropping approximately 23% upon the report’s release, before rebounding to a slight gain. Nonetheless, by the conclusion of the after-hours session, the stock had descended by 9%.
Pinterest’s Chief Executive, Bill Ready, remarked on the robust fourth quarter, marking the culmination of a transformative year for the company.
The worldwide monthly active users soared to a record-breaking 498 million, demonstrating an 11% surge compared to the previous year, predominantly propelled by Gen Zers.
During a conference call with analysts, Ready disclosed that the company is currently in the process of developing an AI-based automated advertising system.
Furthermore, he unveiled Google’s forthcoming collaboration as a third-party ad-integration partner, building upon Pinterest’s existing partnership with Amazon.com Inc.
Looking forward, Pinterest anticipates first-quarter revenue ranging between $690 million and $705 million. Analysts surveyed by FactSet are expecting first-quarter revenue of $702 million.
Despite a decline in food and beverage advertising during the fourth quarter, Chief Financial Officer Julia Brau Donnelly conveyed confidence in a promising start for the first quarter.
Advertising expenditure emerged as a pivotal factor in the earnings report, echoing patterns noted in reports from other major players such as Meta Platforms Inc., Alphabet Inc.’s Google, and Snap Inc.
Meta and Google showcased notable strides in ad revenue, establishing a lofty standard for Pinterest and other players in the industry.
Insider Intelligence principal analyst Jeremy Goldman pointed out that Pinterest’s Q4 figures, although commendable, could encounter scrutiny from the market, particularly following Meta’s remarkable performance the preceding week.
In the past year, Pinterest’s stock has surged by 64%, surpassing the broader S&P 500 index, which saw a 22% increase.
The market’s reaction to Pinterest’s recent financial results underscores the elevated expectations and competitive environment within the digital advertising realm.
