Guggenheim Downgrades Pinterest Sending Shares Sinking

Social media company Pinterest saw its shares drop 9% on Tuesday after Guggenheim downgraded the stock to “neutral” from “buy” citing concerns of slowing user trends.

According to Guggenheim analyst Michael Morris, data indicates that “continued usage weakness and another quarter of below-consensus results.”

Morris went on to write in a note, “we don’t see the platform’s use case as developing as rapidly as peers, creating risk that competitors improve their social commerce offerings more quickly than Pinterest capitalizes on its position.”

The analyst’s research data has indicated that user slowdowns for the second consecutive month and downloads also pointing to declines. Furthermore, Morris highlights social media competitor SNAP (SNAP) is seeing persistent usage momentum into 2022.

The firm also cited data from Apptopia, a third party research concern, which showed a decline in average daily downloads through Dec. 15.
Using data from Pinterest Ads Manager, Guggenheim said the company’s aggregate global audience dipped to 218.1 million at year-end, compared to 226.9 million on Nov. 30.

“This reflects the second consecutive sequential decline, though decreasing off the largest total audience reach of 2021 in October (229.3 million),” the firm said in the Tuesday note.

The firm now expects Pinterest to report 438 million monthly active users for the fourth quarter, down from an expectation of 447 million users.

“We still see value creation potential for the company’s large global user base and high-purchase-intent user behavior,” Guggenheim said. “However, we don’t see the platform’s use case as developing as rapidly as peers, creating risk that competitors improve their social commerce offerings more quickly than Pinterest capitalizes on its position. Without user growth, we see risk of further valuation multiple contraction.”

Last year shares of Pinterest had dropped over 40%. In 2020 they had surged over 250%.

In October the company had announced that payments giant PayPal (PYPL) was mulling an acquisition of the image-based platform. No acquisition was ultimately pursued however.

Pinterest shares were listed as one of the top five trending tickers on Yahoo Finance on Tuesday.

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.