Pinterest shares fall to 6-year low after report. Analysts downgrade

Shares of image and idea search service Pinterest plummeted by a quarter in trading on Feb. 13 and hit their lowest since the spring of 2020. This came after the company reported a worse-than-expected fourth quarter and gave a weak outlook for the first quarter of 2026. Several analysts, including those from JPMorgan and Bank of America, reacted by downgrading the securities.

Shares of photo hosting Pinterest during trading on February 13, declined by 25% - to $ 13.84 per share. This was their lowest price in about six years - since April 2020. By the close, the stock recovered some of its losses, but still fell 16.8% to $15.42.

Pinterest shares lost more than a fifth of their value for the second quarter in a row after poor reporting, CNBC reported.

- The photo host's quarterly revenue rose 14% year-on-year to $1.32 billion, but Wall Street analysts had expected a slightly higher $1.33 billion, CNBC reported.

- Net income fell 85% to $277 million from $1.85 billion a year earlier. However, a year ago the result was atypically large, as it included a deferred tax benefit.

- Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $541.5 million against analysts' forecast of $550 million.

- Meanwhile, Pinterest's global user base expanded last quarter. The number of monthly active users increased 12% to a record 619 million against Wall Street expectations of 613 million.

- For the first quarter of 2026, which is underway now, Pinterest is forecasting revenue in the range of $951-971 million versus analysts' expectations of $980 million.

Pinterest faced an "external shock" last quarter related to import duties that are weighing heavily on the service's advertisers, CEO Bill Redi said after reporting, Investing.com reported. While Pinterest sees "long-term opportunities" from large advertisers, the near-term outlook remains "under pressure," Redi noted in a CNBC statement. The company plans to more aggressively target advertisers among SMBs and international clients to reduce its reliance on the largest U.S. networks, the top executive added.

The impact of the duties on major retailers has created "more significant headwinds" than the service expected and has led to a reduction in their advertising spend, including in Europe, CNBC quoted Pinterest CFO Julia Donnelly as saying. The company warned that these factors could intensify in the first quarter of 2026.

Evercore ISI downgraded Pinterest's stock from Outperform ("above market," consistent with a buy recommendation) to In-line (on par with the market, a hold recommendation) after reporting, Seeking Alpha reported. Analysts acknowledged that lower ad spending by retailers due to the duties was a factor in the revenue decline, but they also pointed to increased competition for Pinterest - from Google, Meta and possibly Reddit. The market situation is likely to become even more challenging in 2026 and 2027 with the return of TikTok to the US and the launch of ChatGPT ads, believes Evercore ISI.

The main challenge for photo hosting is that artificial intelligence could eliminate the need for an intermediary like Pinterest altogether: AI now combines product search with shopping, which was previously a specialty of the service, Marketwatch notes.

"While for many companies, the downside risks to the stock due to AI suggest rapid, exponential progress in the technology, for Pinterest the threat is more immediate, even if AI capabilities stabilize at current levels," said Jefferies analysts led by James Heaney (quoted by MarketWatch). As a result, despite the stock's seemingly low valuation, it remains difficult for buyers to decide to buy it, they added.

"In the rapidly evolving artificial intelligence market, Pinterest is limited by outdated monetization models," said Lenny Zephirin, head of research at Zephirin Group, a Zephirin research firm, in a statement to Reuters.

JPMorgan, Bank of America Securities, Citi, RBC Capital Markets and Loop Capital also declined from their advice to buy shares of Pinterest on Friday, Yahoo Finance writes. The first three set a Neutral rating, RBC set a Sector Perform rating and Loop set a Hold rating. All of them mean a recommendation to hold the securities.

Most analysts, however, are still advising to buy Pinterest shares: the securities have a total of 23 Buy and Outperform ratings versus 17 Hold and one Sell recommendation, FactSet shows. But by comparison, a month ago the stock had 31 Buy and 10 Hold recommendations.

The stock's average target price of $24.65 implies a 60% upside from current levels.

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