Pinterest Shares Plummet On Revenue Miss

Social media app Pinterest Inc failed to meet Wall Street’s quarterly revenue goals with average revenue per user coming in lower than had been expected.  Coupled with a downward revision in the company’s full-year sales forecast—which is now just slightly lower than expectations—shares of Pinterest tumbled 19 percent.  

After the closing bell, on Thursday, Pinterest took a bit of plunge and many expect this will easily erase most—if not all—of the gains they had made since the novelty online scrapbooking company launched its initial—and quite impressive—public offering.  That was in April, and despite the apps popularity since then, the stock is only 6 percent above that IPO price, today.

On average, Pinterest has posted revenue of 90 cents per user, globally, through the third quarter. This particular mark is not too far off the goal: only a penny shy of the 91 cents that analysts had expected.   Unfortunately, though, the company has reported a net loss of $124.7 million, which is exceedingly more than the $18.9 million loss Pinterest reported one year ago.  This dramatic shift comes after costs and expenses doubled, this year, to $413.4 million. 

All that in mind, Pinterest’s Chief Financial Officer Todd Morgenfeld said, on an earnings call with analysts, the company has been making more investments in many areas, including advertiser diversification. Essentially, he says, they are playing the proverbial long game that will pay out within the next year or so.  

In other data, Pinterest’s total revenue did increase, by roughly 47 percent, to $279.7 million, through third quarter 2019.  This, however, also fell short of analyst expectations, which put revenue at $280.6 million.  Pinterest, like so many other popular websites/mobile apps/sharing sites, generates this revenue through strategically placed advertisements mixed in with user pins and posts.  

It is also definitely worth noting that Pinterest earned one cent per share, excluding some items. This is far better than the four cent loss that analysts had expected.  In all, Pinterest still expects total revenue for the year to come in between $1.10 and $1.115 billion, which is mostly in line with its prior forecast of the $1.095 to $1.115 billion range. It is also just shy of analyst expectations of $1.12 billion.