Pinterest’s stock soared last week after Snap reported its strongest quarter in four years, with investors expecting that Pinterest’s image-based social platform will enjoy a boost in ad spending as well.
Pinterest’s earnings surpassed forecasts in the second quarter, with sales of $613.2 million and earnings per share of 25 cents, exceeding analysts’ predictions. Pinterest’s shares, on the other hand, plummeted when the firm announced a 9% increase in monthly active users to 454 million, when experts expected 482 million.
Earnings at a glance
Adjusted earnings per share: 25 cents, up above Refinitiv’s expectation of 13 cents.
454 million monthly active users vs. 482 million predicted by StreetAccount
The average revenue per user is $1.32, compared to $1.17 predicted by StreetAccount.
Wall Street had predicted sales of $562.3 million and earnings of $0.133 per share ahead of Pinterest’s release, up from a loss of $0.70 per share in the same period previous year.
Revenue
$613 million, compared to Refinitiv’s expectation of $562.1 million. The firm recorded $613 million in revenue for the quarter, rising over 125 percent year over year. Pinterest had a net profit of $69.4 million. The firm had a net loss of more than $100.7 million a year earlier.
However, while Pinterest’s financials were strong, the company’s problems with user growth drove the price plummeting.
During the early days of the pandemic, the image pinboard and shopping inspiration site benefited from increased engagement and user growth, but both slowed in the first quarter of 2021 due to the easing of COVID-19 restrictions, which sent the stock down by more than 10% after the first quarter earnings were released.
In after-hours trading today, the stock was down more than 12%, immediately after earnings were published.
Decline in Users
Pinterest reported 454 million monthly active users in May, a decrease of more than 5% from the 478 million recorded in April.
The picture sharing app also stated that, as of July 27, 2021, its monthly active users in the United States had declined by around 7%, while global monthly active users have seen a growth by about 5%.
Pinterest claims that its online users are less engaged and produce less income than its mobile app users. Monthly active users on mobile applications increased by more than 20% year over year in the second quarter in the United States and worldwide.
Other Social media platforms
Other social media platforms have also struggled to fulfill user growth targets. Last week, Twitter fell barely short of its monetizable daily active user targets. On Wednesday, Facebook met DAU forecasts while falling short of MAU projections. Snap, on the other hand, was able to exceed its DAU projections last week.
Why did it lose users?
On the earnings conference, Pinterest addressed the issue of user growth right away, blaming the COVID epidemic for the drop in usage.
Third quarter forecasts
Pinterest also forecasted year-over-year revenue growth in the “low 40s” for the third quarter. This was in line with Refinitiv’s forecast for 42.8 percent year-over-year revenue increase in the coming quarter.
However, because to the uncertain impact of Covid-19 variations, the firm declined to issue Q3 MAU projection.
