Pinterest CEO Bill Ready stated he was not pleased with third-quarter results that missed Wall Street targets. The visual-search platform posted $1.17 billion in revenue for the quarter, falling short of the $1.21 billion analyst consensus.
European Regulatory Shifts Hit Cross-Border Sellers
Pinterest attributed its six-percentage-point sequential slowdown in revenue growth directly to a pullback in spending by cross-border sellers. The contraction followed European Union regulatory changes to the de minimis exemption.
Pinterest CEO Bill Ready graduated from UofL in 2001 with a degree in information systems, before going on to Harvard Business School and eventually a string of jobs in some of the world’s top tech companies. https://t.co/BRYOLb6mIO
Additional headwinds compounded the quarter. Approximately two percentage points of the growth deceleration reflected the timing of Prime Day and World Cup-related ad spend that executives highlighted during the previous quarter. Foreign exchange shifts added one point of growth in the second quarter before turning neutral in the third.
Overall revenue rose 11.9% year-over-year, missing expectations. Adjusted profit settled at $0.46 per share, below the $0.49 expected by analysts. Total ad impressions climbed 17%, while overall ad pricing fell 4%.
Bill Ready Targets Revenue Diversification Amid Soft Guidance
Chief Executive Officer Bill Ready addressed the underperformance during the analyst earnings call. “Overall, Q3 revenue came in below our range. We are not happy with that result, and we have clear plans in place to accelerate our revenue diversification efforts,” Ready stated.
The company issued a fourth-quarter revenue forecast ranging between $1.425 billion and $1.475 billion. This projected growth rate of 8% to 12% fell short of the $1.52 billion consensus anticipated by Wall Street.
Pinterest stock tumbled over 7% in overnight trading ahead of Friday sessions following the report. Shares ended regular trading down 4.8% on Thursday after Alphabet’s earnings sparked broader market fears regarding online advertising growth. Year-to-date, Pinterest stock has dropped 23%.
Retail Sentiment Flips to Bullish Despite Institutional Pullback
On Stocktwits, retail sentiment for Pinterest flipped from bearish to bullish as individual traders anticipated a near-term stock bounce.
“$PINS traded this stock for years, it does the same thing every earnings, drops 20 percent ramps 10 percent then goes flat in the AM then the following week drops 5 percent finds its way back to 19 every time,” one retail trader noted on the platform.
Another investor highlighted platform growth metrics despite the financial miss. “I bought more. At $22 I unloaded a third of my position and now, buying right back in. Earnings was not bad at all. Users grew by 60 million. Revenue by 12% and with the new CFO, they are going to drive efficiencies. This will be back into the $21 range by New Years,” the user wrote.
