One of the most noteworthy stock moves on Friday was social media giant Pinterest (NYSE: PINS). What used to be one of the more promising IPOs in the market, Pinterest has since tumbled to an all-time low recently. Shares of the company tumbled as much as 17% on Friday after the company announced its financial results which were quite a bit off from analyst expectations.
Overall, Pinterest reported revenue of $279.7 million, a significant decline from the $374.3 million expected by Wall Street. Earnings per share also came in at just one penny, which is just a fraction of the original $0.08 expected by financial experts. Although revenues had seen a significant increase, where last year it had reported $190.2 million in income, losses have skyrocketed. Back in Q3 2018, Pinterest reported a loss of $22.4 million, while in Q3 2019, the company saw this figure grow to a loss of $124.7 million, a 561% increase.
“In Q3, we redesigned Pinterest to make the service more intuitive and improved recommendations quality to help people discover new ideas they didn’t know about before,” said Ben Silbermann, Pinterest CEO and Co-founder. “We are also expanding the number of shoppable products on Pinterest, which makes it easy for our users to go from inspiration to action.”
Pinterest also stated that it expected the remainder of 2019 to be quite weak, with overall revenues for the year coming in at around $1.1 billion to $1.15 billion, which could end up matching Wall Street’s year-end revenue goal of $1.12 billion for the social media giant. In comparison to its larger online advertising rivals Facebook (NASDAQ: FB) and Google (NASDAQ: GOOGL), Pinterest has been growing its user bases more quickly and tends to target a more unique demographic. Sales are up 47% from a year ago, while Facebook and Google’s ad growth has come in at a more modest 28% and 17% respectively.
Pinterest has yet to turn a profit, something that many IPO investors have become increasingly frustrated about. While in the past, investors were willing to overlook a lack of profitability in promising tech companies, this was made with the assumption that growth would continue to surge. With Pinterest’s growth figures, while strong, still failing to impress, investors are asking themselves why exactly they should keep their money in this stock.
IPO’s an the whole have seen disappointing performance over the past few months. In a year where there have been dozens of unicorn tech IPOs, including companies like Lyft and Uber, the biggest winners have been non-tech stocks such as Beyond Meat. It’s up to investors to decide what this means for the IPO market, but what does seem to be clear is that most tech companies in this area are likely to continue to underperform expectations.
Pinterest Company Profile
Pinterest is an online product and idea discovery platform that helps users gather ideas on everything from recipes to cook to destinations to travel to. Founded in 2010, the platform consists of a largely female audience, at roughly two thirds of its 250 million monthly active users. The company generates revenue by selling digital ads and is now rolling out more in-platform e-commerce features. – Warrior Trading News
