Key Takeaways
- Pinterest closed at $18.96, down 19% in three months, near the $18.17 average price it paid for more than $2 billion of buybacks.
- Third-quarter revenue grew 12% to $1.17 billion, missing its own guidance after EU rule changes cut cross-border seller ad spending.
- Reddit plunged about 30% the same day after warning that Google’s AI search is cutting its traffic, while Pinterest’s users hit a record.
- Pinterest’s early February report must show fourth-quarter revenue near the top of its $1.425 billion to $1.475 billion guide.
Pinterest (PINS) closed Friday at $18.96, down 4.2% on the day and 19% over three months. Earlier this year, it spent more than $2 billion buying back stock at an average of $18.17.
Oct. 30 hit two social platforms hard. Reddit (RDDT) plunged about 30% after warning that Google’s AI search features are cutting its referral traffic, while Pinterest slid on a revenue miss and a weak holiday guide.
The problems aren’t the same. Reddit is losing visitors, with U.S. daily users down 2% to 50.7 million. Pinterest set a user record, and its weak spot was advertisers in Europe.
A customs rule cost three points
CEO Bill Ready blamed the European Union’s removal of its de minimis exemption on low-value imports, which led cross-border sellers to cut ad spending. “The regulatory impact was greater than we anticipated,” he said on the earnings call.
That pullback took about 3 points off global growth. The rest of the damage:
- Revenue rose 12% to $1.17 billion, below Pinterest’s own $1.19 billion to $1.21 billion range.
- Europe revenue was flat at $193 million, with cross-border sellers an 11-point drag.
- Adjusted EPS of $0.46 missed the $0.49 estimate.
Quarterly sales make the stall easy to spot…
Third-quarter revenue slipped below the second quarter’s $1.18 billion, an unusual dip heading into the holidays.
Record users, flat monetization
Monthly active users reached a record 661 million, up 10%, with rest of world growing fastest. Revenue grew only a bit faster, so revenue per user barely moved.
Reddit shows the mirror image. Its revenue jumped 53% to $895 million even as U.S. users fell.
The fourth-quarter guide reflects Pinterest’s strain. It expects revenue of $1.425 billion to $1.475 billion, up 8% to 12%, against a $1.52 billion consensus. Adjusted EBITDA is guided to $538 million to $588 million, below the $611.8 million estimate.
Ready called the range a “prudent baseline” and said cross-border pressure has stabilized. Analysts still model steady growth from here:
Management called the timing of a cross-border recovery uncertain, so those later-year estimates carry risk. New CFO James Dibbo, an Amazon veteran who started Oct. 26, inherits them.
TIKR tracks 39 analysts on Pinterest. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Pinterest, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Pinterest’s Analyst Ratings
Priced for slow growth
Pinterest trades at 8.9x forward earnings and 7.0x forward EBITDA, and it holds about $274 million more cash than debt. How does that compare with its own history?
At under 9x earnings, the market is paying for very little growth.
Elliott’s $1 billion investment in March and a new $700 million credit facility give Pinterest room to keep buying stock. Co-founder and director Benjamin Silbermann has been selling, though, with three filings since mid-October totaling about $6 million.
My take: Pinterest looks cheap, and the Street’s $25.25 average target implies 33% upside. Missing its own guide makes the next forecast harder to trust, so I’d start small and add only after Europe stabilizes.
The fourth-quarter report, expected in early February, settles it. Revenue at or above $1.475 billion would back Ready’s read on cross-border pressure, while a figure near $1.425 billion would mean Europe got worse.
So what is Pinterest stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
