Pinterest (NYSE:PINS) shares plunged more than 18% in premarket U.S. trading on Wednesday after the social media platform reported third-quarter earnings that fell short of Wall Street expectations, despite solid revenue growth and user expansion.
The weaker-than-expected results have fueled investor worries about intensifying competition from digital advertising giants such as Meta Platforms (NASDAQ:META), Alphabet (NASDAQ:GOOG), and Reddit (NYSE:RDDT) — all of which recently delivered stronger quarterly performances.
Pinterest posted adjusted earnings of $0.38 per share, missing the analyst consensus of $0.43. Revenue rose 17% year over year to $1.05 billion, broadly in line with forecasts, as global advertising demand held steady.
The company’s monthly active users climbed 12% to a record 600 million, driven by growth in international markets and ongoing product enhancements aimed at increasing engagement. Adjusted EBITDA came in at $306 million, while free cash flow reached $318 million.
Chief Executive Bill Ready highlighted Pinterest’s progress in integrating artificial intelligence and visual search tools, saying these technologies have transformed the platform into an “AI-powered shopping assistant,” helping advertisers connect more effectively with consumers.
For the fourth quarter, the company guided revenue between $1.31 billion and $1.34 billion, roughly in line with analyst expectations.
“We were wrong about Pinterest’s ability to drive durable, faster than expected revenue growth from its platform and engagement/monetization improvements,” analysts at Morgan Stanley, including Brian Nowak and Matt Bombassei, wrote in a note.