Shares of Pinterest popped last week after Snap posted its best quarter in four years, as investors were betting that Pinterest’s image-based social app would return advertiser spend as well. Those expectations now appear to be correct, as Pinterest beat analysts’ estimates with second-quarter revenue of $613.2 million and earnings per share of 25 cents. However, Pinterest stock still tanks as the company reported monthly active user growth of just 9% to reach 454 million, when analysts were expecting 482 million.
Prior to Pinterest’s announcement, Wall St. had forecast revenue of $562.3 million and earnings of $0.133 per share, up from a loss of $0.70 per share from the same quarter last year.
But when Pinterest turned financial distribution, the company’s struggle with user growth caused the stock to plummet.
Image Pinboard and the shopping inspiration site initially benefited from increased engagement and user growth in the early days of the pandemic, but both slowed in the first quarter of 2021 due to the easing of COVID-19 restrictions, which then drove the stock down. sent. More than 10% after it posted its first quarter earnings.
Shortly after the earnings announcement, the stock was down more than 12% in after-hours trading today.
Pinterest addressed the issues surrounding user growth on the earnings call, again blaming the COVID pandemic for the decline in usage.
“The pandemic was an unprecedented and unique global event,” explained Pinterest CEO Ben Silberman. “In the last earnings call, we talked about how stay-at-home orders led to a significant increase in the use of Pinterest. And for the past year, we’ve highlighted how people are going through such difficult times. Came to Pinterest for inspiration to re-create your life during the day,” he continued. “Now, as the world opens up, we are seeing a similar effect in the opposite direction that has impacted our growth – especially because some of the main use cases we see on our platform are in 2021 compared to a year ago. are less common. This transfer behavior in Q2 affects engagement,” Silbermann said.
The company also noted that, as of July 27, 2021, its monthly active users in the US had declined by about 7%, while global monthly active users had grown by about 5% year over year.
Pinterest said its web users tend to be less engaged and generate less revenue than those coming from the mobile app. In the second quarter, its monthly active users on the mobile app grew more than 20% year over year, both in the US and internationally.
The company’s issues with user growth and engagement indicate how important the future of Pinterest is to the company’s plans to cater to the creator industry. Recently, the company launched video-first idea pins that allow creators to showcase their crafts, recipes, fashion, beauty tutorials, projects, or anything else. This week, Pinterest introduced new features that will now allow creators to earn money from those Pins.
Despite user growth issues, the return of ad spend led to a 78% year-over-year revenue increase in the first quarter, and the company predicts it will deliver more than 105% year-over-year revenue growth in Q2. Will see growth. Today, it posted 125% revenue growth — up 116% from what Snap reported in its record second quarter — a figure Pinterest attributed to the return of advertisers.