Pinterest stock drops 20% after disappointing earnings and weak forecast

• Fourth-quarter revenue of $1.32 billion fell short of the $1.33 billion expected, with Q1 guidance of $951-971 million trailing analyst estimates of $980 million
• Global monthly active users grew 12% year-over-year to a record 619 million, surpassing the expected 613 million
• Adjusted EBITDA of $541.5 million missed the $550 million target, while the company recently cut less than 15% of its workforce to focus resources on AI-powered product development

Pinterest Stock Plunges 20% on Earnings Miss and Weak Guidance

Pinterest reported disappointing fourth-quarter results and issued below-consensus guidance, sending shares down 20%. The social media platform posted Q4 revenue of $1.32 billion, missing analyst estimates of $1.33 billion, while earnings per share also fell short of expectations.

Key Financial Metrics:

• Q4 revenue grew 14% year-over-year to $1.32 billion
• Net income plummeted 85% to $277 million (from $1.85 billion a year prior, which included a one-time benefit)
• Adjusted EBITDA came in at $541.5 million, below the $550 million estimate
• U.S. and Canada revenue reached $979 million, exceeding the $973 million forecast

Guidance Concerns:

The company projected Q1 revenue between $951 million and $971 million, significantly below the $980 million analyst consensus, raising concerns about near-term growth momentum.

User Growth Bright Spot:

Global monthly active users hit an all-time high of 619 million, up 12% year-over-year and surpassing Wall Street's expectation of 613 million.

Strategic Initiatives:

CEO Bill Ready emphasized the company's focus on "transforming sales and go-to-market efforts" to better monetize user engagement. In January, Pinterest announced layoffs affecting less than 15% of its workforce to redirect resources toward AI-powered product development. The restructuring sparked internal controversy when the company fired employees who created a tool to track the layoffs.

Market Implications:

The significant stock decline reflects investor concerns about Pinterest's ability to convert strong user growth into proportional revenue expansion amid a challenging advertising environment and ongoing operational restructuring.