Shares for Pinterest slid lower following its quarterly report. While the second-quarter revenue went above analysts’ estimates, the social media’s monthly active users failed to exceed analysts’ expectations.
Just last week, Pinterest noted a notable decline in its shares when Snap posted its best quarter in four years. At that time, investors were hopeful over Pinterest’s return in advertiser spending. Pinterest managed to live up the expectation and generated $613.2 million in its second-quarter revenue and earnings per share of 25 cents, exceeding analysts’ estimates.
Wall Street had forecasted Pinterest to achieve $562.3 million and earnings of $0.133 per share. This alone would have noted a rise from the $0.70 per share earnings recorded from the same quarter last year.
Despite Pinterest’s growth in financials, investors seem to still have concerns over its user growth.
The image-based social app reported slow growth in its active user count with only 9% to reach 454 million. The figure went below analysts’ expectations at 482 million and further dragged its shares down.
Pinterest: user growth still become the biggest concern
Pinterest benefitted through the stay-at-home regulations and restrictions concerning the pandemic. Compared to the early period of the pandemic, Pinterest’s engagement and user growth started to decline starting from the first quarter of 2021. After Pinterest posted its first-quarter earnings, the company’s shares slumped by over 10%.
The same occurrence happened again today. Shortly after the announcement of the earnings, the stock of Pinterest slid by more than 12% in after-hours trading.
Similar to the excuse given in the first-quarter result’s report, Pinterest blamed the COVID pandemic again for the losses.
Pinterest further pointed out that web users are generally less engaged and generate less revenue compared to mobile app users.
Pinterest’s CEO on the pandemic: “an unprecedented and unique global event”
Tech Crunch quoted Pinterest CEO Ben Silbermannstarted as saying, “The pandemic was an unprecedented and unique global event”.
“In past earnings calls, we talked about how stay-at-home orders significantly increased usage of Pinterest. And for the past year, we’ve highlighted how people came to Pinterest for inspiration to reinvent their lives during such a difficult time,” he continued.
“Now, as the world opens up, we’re seeing the similar effect in the opposite direction that impacted our growth — particularly because some of the core use cases we see on our platform are less common in 2021 than they were a year ago. That shifting behavior in Q2 impacts engagement,” Silbermann further said.
Accordingly, Pinterest noted that as of July 27, 2021, its monthly active users in the U.S. had dropped by approximately 7%,. Meanwhile, its global monthly active users increased approximately 5% year over year.
Additionally, Pinterest reported a rise in year-over-year revenue growth of 78% in the first quarter thanks to the return of ad spending.
The company is confident that it could reach even higher 105% year-over-year revenue growth in Q2. Today, Pinterest revealed a 125% jump in revenue. This figure exceeds Snap’s 116% record for the second quarter. The digit is often attributed by Pinterest to advertisers’ returns.