Despite missing sales and profit projections and providing disappointing third-quarter outlook, Pinterest shares rose on higher-than-expected user counts. The largest shareholder in Pinterest, according to activist investor Elliott Management, who also expressed “confidence in the value-creation opportunities” at the business. According to Pinterest, 433 million monthly active users are now worldwide, down 5% from a year ago. Although that kind of fall is concerning for a social networking service that depends on users to draw in advertising, experts had anticipated a more drastic drop to 431 million.
The company’s Financial Results were depressing, as was typical in the social media industry. As a result of a sluggish online advertising market, Facebook parent company Meta, Twitter, and Snap all posted second-quarter earnings that underperformed on both the top and bottom lines. Pinterest’s statement about what was anticipated for this quarter was more concerning than its second-quarter numbers. The business stated that it anticipates third-quarter revenue to increase by “mid-single digits on a year-over-year percentage basis,” falling short of analysts’ expectations for sales to increase by 12.7%.
According to a letter from Pinterest to investors, economic difficulties are forcing marketers to rein their expenditure. According to Pinterest’s message, “the macroeconomic situation has generated considerable uncertainty for our advertisement partners.” The business reported that large box retailers and mid-market marketers in the United States had “lower than projected demand, who scaled back ad expenditure owing to fears about deteriorating consumer demand.” According to Pinterest, its third-quarter projection accounts for “slightly more foreign exchange headwinds” than it did in the second quarter. Ben Silbermann, a co-founder of Pinterest, retired in June and was succeeded as CEO by Bill Ready, a former head of Google’s commerce division.
Ready’s hire by Pinterest indicated a stronger push towards online retail and e-commerce. The Wall Street Journal reported on Elliott’s engagement with the company in July and stated at the time that the fund had amassed a stake of over 9% in it. Following the publication of Pinterest’s Financial Results on Monday, Elliott revealed it is the largest stakeholder in the business and expressed satisfaction with Ready’s development.