Pinterest Shares Just Took a Nosedive After a Disappointing Outlook

While Pinterest beat expectations in its earnings report for the first quarter, traders were not impressed with the digital scrapbooking comany’s outlook. This was the first quarterly report for the company since it debuted in the market in April.

Tor the first quarter, Pinterest reported sales of $201.9 million. This came in ahead of the $200.8 million that Wall Street had been expecting. The company’s loss for the quarter was 32 cents a share, which was wider than what analysts expected.

In comparison, Pinterest posted revenue of $131.4 million and a 38 cent adjusted net loss a share in the year ago quarter.

Pinterest also reported 291 million monthly active users for the first quarter which was in line with what was expected.

CEO Ben Silbermann said on the earnings call, “For the last nine years, we’ve expanded our mission into something more ambitious to help people all over the world get inspiration to plan their lives and help them make those plans a reality off-line. We’ve come a pretty long way since 2010. As you can see in the shareholder letter we released today, there are now 290 million people using Pinterest every month all over the world. They’ve created more than 4 billion named collections that we call Pinboards, and more than 200 billion ideas have been saved to these boards which pinners are bringing to life every day.”

“And what’s interesting isn’t just how many people are coming to Pinterest and what they’re doing, it’s also why. People come to Pinterest to focus on themselves, their interests, and their lives, not to keep up with other people or to socialize. They come to plan their futures, not to relive the past and they come to be productive in the real lives, not strictly for online entertainment. What’s great is that unlike many platforms where advertisements are attacks on the user experience, we think ads on Pinterest can add to the experience. Commercial content helps our users be productive, plan their futures, and bring their plans to life. In fact, relevant ads are often the springboard that takes them from feeling inspired to actually making a plan into reality.”
“We believe that fundamental alignment between users and the businesses that are advertising on Pinterest is special, and that’s why we’re excited about the business we’re building,” he added.

“We’re not disclosing how many advertisers we have…[but] our growth rate has accelerated in Q1,” CFO Todd Morgenfeld remarked.

Looking ahead, the company has said it expects to see revenue in the range of $1.06 billion and $1.08 billion. Wall Street had been expecting $1.09 billion.
Shares fell as much as 17% on the news and fell under $26 a share for the first time since the end of April.
“The only thing giving us pause is the current 12x 2020 revenue multiple and the track record of mobile advertising IPOs chopping around for a bit after the initial post IPO pop,” Barclays analyst Ross Sandler said before the company posted results.

Disclaimer: We have no position in Pinterest Inc. (NYSE: PINS) and have not been compensated for this article.