Although Pinterest missed second-quarter revenue and earnings estimates, its stock still jumped 20% today. Why? While the 11 cents per share in earnings was significantly lower than the 18 cent estimate, the revenue of $666 million was just a tick short of the $667 million estimate, and “when it comes to social media stocks, showing revenue growth is better than not showing revenue growth at all,” said Cheddar News’ Michelle Castillo. “They had a growth rate of 9% year over year” — compared with Twitter’s decline of 1%.


Closing Bell

Earnings Results: Pinterest Misses Q2 Estimates but Stock Up 20%

Welcome back to closing bell on Cheddar news, everyone take a look at Pinterest after hours, the stock up 20%. So very nice gains just shy of $24 apiece. I did miss earnings results, but the company's stock jumping as investors seem to think that it could have been a lot worse and as it gets major support from a very big activist investor. So I do want to bring back channel news, senior reporter Michelle Castillo to help us break this down. Michelle, what a Pinterest report and why is the stock popping so much despite the miss? You know, let's go talk about the top and bottom line just for anyone who might have missed it earlier. So Pinterest came in at 11 cents per share on an adjusted basis. The analysts estimate was 18 cents per share according to Refinitiv and revenue came in a little light at 666 million. The estimate was 667 million. So overall you would think this is not great news for the company, but in this case and especially when it comes to social media stocks Showing revenue growth is better than not showing revenue growth at all. So they had a growth rate of 9% year over year. Um, let's compare that to someone like Twitter, which actually declined 1% year over year. And they also said that they would continue to grow single digits in the next quarter, compare that to snap, who wouldn't even give guidance and said so far the third quarter was looking flat for them. So There's a couple of good things there. Another thing that's interesting to note is Pinterest did note about a 5% decrease in monthly active users down to 533 million. However, the street was expecting them to report a further loss down to 531 million. So beating there I think gave people a little bit more confidence and they are pretty confident with the new ceo bill ready, definitely seeing that they're going to be investing more in e commerce. And shopping a smarter strategy as advertisers at this time, pull back from, pull back from spending on ads that aren't directly leading to sales. But Pinterest seems to have some of those mechanisms in place to ensure that if you spend a dollar, someone will buy something. And I think that makes um, at least investors on the street a little bit more confident that this is the smarter strategy at that time. Well, what other insights Michelle were we able to glean from this report? Because it does feel like such a momentous time, Such an important time. That is perhaps an inflection point for this overall social media industry. Well, I think the pivot to shopping and e commerce is really one of the things that Pinterest is trying to hammer down at this time. The fact that they as a platform, this is the perfect place to spend your dollars if you want to lead to a direct sale. In fact, they said shopping ads revenue in particular grew at double the rate of the average revenue. So I said they were growing at a rate of 9%. Shopping ads revenue actually grew at a rate of 18% and this is where the companies willing to invest. So I think that's why you're seeing investors also say, Hey, this is a good strategy going forward for this company. In June of 2022 they purchase Ai shopping recommendations platform. The yes, they installed the Ceo as their head of shopping. Um, so really looking to gear that up in the near future, we already know that several brands, they highlighted some of the letter to shareholders, including scotch tape have really seen good sales because of working with Pinterest and if this is where advertisers and brands are going to be putting their money into performance, marketing a. K leading to a direct sale. This company is really positioning themselves as one of the places that you have to be on. So good news for them. I think they chose a smart strategy. Well, I know that we had heard in the past several weeks ago that big time activist investor based here in new york, Elliott management was taking a stake in Pinterest and giving in fact a vote of confidence in this report for both Pinterest and the Ceo Bill Ready. How much of an impact Michelle do you think that that's having, you know, just showing that they're confident in the leadership changes a huge difference. So just a few weeks back, Elliott management, um, it was revealed that in The Wall Street Journal report that they had been buying more and more of the company. Their steak is a little bit more than 9% at this time. Now this could indicate that this is going to be a hostile takeover, but people don't think that actually is the case. Um, the former Ceo Ben Silverman, he does have about 37% of the vote. So it would be hard to have a hostile takeover by an activist group like Elliott Management, but this just shows that they are bullish on the company that they think that this is a start smart strategy going forward. I think that's also bolstering confidence though. This report on the surface may look like it is a weak report considering that they missed analyst estimates, it is just very impressive to know that they are still having that growth rate. Um, even though they're losing users, it's not as fast as the street was expecting and that average revenue per user rate is growing in double digits kind of offsetting the number of users who are leaving. So good news for a company that's among the second tier of digital advertising platforms being it's not in the same category as the metas and alphabets of the world, but it does survive a does provide a very interesting niche, especially for those who are in the e commerce space or director consumer brands and a record year for weddings. I know we had a guest on earlier just a few weeks ago saying a record year for weddings. So that's got to be some good news on the big business for Pinterest and think about even home sales. That's right. You got to decorate D. I. Y. That is exactly right. Alright. Cheddar News senior reporter Michele Castelli. Oh, Michelle, thank you so much for joining today.