Pinterest Stock Surges 20% Despite Disappointing Q2 Earnings
Pinterest sees its stock jump over 20% after reporting flat user growth and lower-than-expected profits, as investors find relief in results that are not as terrible as feared.
Pinterest reports disappointing Q2 earnings as revenue grows just 9% year over year to $665.9 million, marking the company's slowest revenue growth in two years. The social network posts a net loss of $43.1 million and misses earnings expectations, while warning investors that third-quarter revenue growth will only reach the mid-single digits instead of the anticipated 12.7%.
The company experiences zero user growth, holding steady at 433 million monthly active users after dropping 5% compared to the previous year. Pinterest blames this stagnation on lingering pandemic impacts, reduced search engine traffic, rising competition from TikTok, and broad macroeconomic uncertainty that negatively affects digital advertising peers like Meta, Snap, and Twitter.
Despite the grim financial data, Pinterest stock surges more than 20% in after-hours trading because the user decline is smaller than analysts predict. The company also receives a significant boost from activist investor Elliott Investment Management, which confirms a greater than 9% stake in Pinterest during the first earnings call under new CEO Bill Ready.