According to CNBC, Pinterest shares plummeted as much as 15% on Tuesday after the company reported third-quarter financial results that missed earnings per share expectations. The company posted $92.11 million in net income, up 201% from a year ago, while revenue grew 17% year-over-year. Pinterest projected fourth-quarter revenue between $1.31 billion and $1.34 billion, with the midpoint falling short of Wall Street’s $1.34 billion estimate. The platform did hit 600 million global monthly active users, beating projections of 590 million, but U.S. and Canada sales of $786 million missed estimates of $799 million. CEO Bill Ready credited the company’s AI investments for turning Pinterest into “an AI-powered shopping assistant” for its user base.
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The bigger picture
Here’s what’s really interesting about this earnings miss. Pinterest is actually growing – 17% revenue growth and 201% net income increase aren’t exactly terrible numbers. But the market’s reacting to something else entirely: the gap between Pinterest’s performance and what other tech giants are delivering in the same digital advertising space.
Look at the contrast. Meta just reported 26% revenue growth with 98% of that coming from ads. Amazon’s ad business grew 24%. Even Reddit, which is much smaller, posted 68% sales growth. So when Pinterest comes in with what looks like solid growth on paper, it’s actually underperforming compared to the broader digital ad market recovery.
The AI question
CEO Bill Ready keeps talking about AI investments paying off, and they’ve clearly made progress on visual search and shopping features. But here’s the thing – every major platform is making massive AI investments right now. The question isn’t whether Pinterest is using AI, but whether their AI implementation is creating enough competitive advantage to justify the spending.
Their user growth to 600 million monthly actives suggests the product improvements are working. But the revenue per user number tells a different story – global ARPU came in at $1.78, slightly below expectations. Basically, they’re getting more users but not necessarily making more money from each one.
What’s next
The weak Q4 guidance is what really spooked investors. When you’re guiding below expectations during what should be the strongest quarter for digital advertising (hello, holiday shopping), that suggests management sees headwinds ahead. And in a market where every other ad platform is crushing it, that kind of caution stands out.
I think Pinterest’s challenge is becoming clearer. They’ve built this amazing visual discovery platform, but monetizing it effectively while competing with Meta, Google, Amazon, and now even TikTok’s shopping features is an incredibly tough battle. The stock reaction might seem harsh, but it reflects real concerns about whether Pinterest can capture its fair share of the digital ad rebound.
