Pinterest has lost a fifth of its value. Why didn't audience growth make the market happy?

Quotes of Pinterest collapsed by more than 21% and lost all growth since the beginning of the year after the publication of the company's report for the third quarter. Its earnings per share was worse than analysts' expectations, suffering from the pressure of U.S. duties on imports. The outlook for the current quarter also disappointed investors. Wall Street analysts have not yet changed their recommendations on Pinterest, but several investment houses have revised their target prices.

Shares of Pinterest, a platform designed to share images and ideas, collapsed by 21% after the publication of the report for the third quarter. Thus, the quotes completely lost all the growth of 2025, now relative to the beginning of January they are trading in the minus by 10%, notes CNBC.

The company reported that its adjusted earnings per share amounted to 38 cents, while LSEG analysts expected 42 cents, the channel reports. Net income tripled compared to the same period last year and reached $92.11 million. Revenue increased by 17% to $1.05 billion, which was fully in line with market forecasts. At the same time, sales in the U.S. and Canada fell short of expectations, CNBC points out.

For the fourth quarter, the company forecast revenue between $1.31 billion and $1.34 billion, while Wall Street estimates were at the upper end of that range at $1.34 billion.

Pinterest attracted more users than expected, with a monthly audience of 600 million - against a forecast of 590 million. Pinterest had 578 million users in the second quarter.

Nearly all of the company's revenue is generated through advertising, and Pinterest is actively developing the role of a "visual search engine" to help users find inspiration for fashion, home improvement projects, and so on. Last week, the company launched "Pinterest Assistant," the first visually-oriented AI assistant for online shopping. Users can interact with the assistant by simulating a real-life shopping experience, Bloomberg notes .

"Our investments in AI and product innovation are delivering results. We've become a leader in visual search and have effectively turned the platform into an AI shopping assistant for 600 million users," said Pinterest CEO Bill Redi.

Meanwhile, CFO Julia Donnelly acknowledged that the platform recorded a "localized decline in ad spending" in the U.S. and Canada in the third quarter. She attributed this to the fact that some major U.S. retailers were facing margin pressure caused by the impact of duties. Donnelly expects this trend to continue.

"Fourth-quarter revenue guidance in the 14-16% range came in worse than Wall Street expectations, disappointing investors," RBC Capital analyst Brad Erickson wrote in a note to clients immediately following the Pinterest report, it was quoted by Investor's Business Daily. He emphasized that the company's benchmark is at the lower end of its own range of annual revenue targets over a 3-5 year horizon.

Pinterest's 9% year-over-year sales growth in the U.S. and Canada was the lowest for the company since the fourth quarter of 2023, Jefferies analyst James Heaney pointed out. He maintained a neutral recommendation on its shares. "We believe investors will continue to remain on the sidelines until one of Pinterest's growth initiatives begins to produce more visible results," he predicted .

"The duty-related weakening affected digital advertising for the first time and will strengthen the bears' arguments about Pinterest's lack of customer base diversification and its heightened sensitivity to macroeconomic factors," the RBC analysts said.

In general, Wall Street was calm about Pinterest's mixed results: RBC Capital, Bank of America, UBS, Wedbush and Oppenheimer reiterated their recommendations to buy the company's securities, but lowered their target prices, MarketScreener shows . Wedbush now has the lowest among them; it changed its target from $44 to $34, warning of risks associated with growing consumer interest in AI-based tools.

Analyst Rosenblatt, on the other hand, declined to recommend buying Pinterest stock and took a neutral stance, CNBC reports, saying he doubts the company's ability to compete with the rapid growth of chatbots.

In total, 35 of the 42 analysts covering Pinterest stock advise buying it, according to MarketWatch. Six suggest holding and only one suggests selling. The consensus target price is just over $40 and corresponds to a 25% upside potential, even excluding the Nov. 5 collapse.

Pinterest shares often show high volatility after reports, even when sales are up, Barron's points out. That said, their valuation reflects some "invisibility" of the securities to investors, the publication says. They trade at a P/E multiple of 16.6 - that is, the share price is 16.6 times expected earnings for the year, while the S&P 500 averages 23.1. Pinterest's multiple is roughly in line with projected earnings growth for next year, making the stock relatively inexpensive, Barron's notes.

This article was AI-translated and verified by a human editor