Why did Pinterest’s shares drop 19% after the earnings report?

Question

Accepted Answer

Pinterest Shares Declined Due to Missed Revenue Expectations and Widened Net Loss

Pinterest's stock experienced a significant 19% drop following its latest earnings report, primarily driven by the company falling short of Wall Street's revenue expectations. This shortfall was largely attributed to a lower-than-anticipated average revenue per user (ARPU) and a revised full-year sales forecast that also came in marginally below analyst projections. The company's financial results revealed a widening net loss, further contributing to investor concern.
Lower-Than-Expected Average Revenue Per User Impacted Quarterly Performance

In the third quarter, Pinterest generated an average revenue of 90 cents per user globally, a figure that narrowly missed the analysts' consensus estimate of 91 cents. This slight miss in ARPU, a key metric for digital advertising platforms, contributed to the overall revenue falling short of expectations. While total revenue did increase by approximately 47% to US$279.7 million for the quarter ending September 30, it still fell short of the US$280.6 million anticipated by analysts.
Full-Year Revenue Forecast Remained Marginally Below Analyst Expectations

The company's outlook for the full fiscal year 2019 also played a role in the stock's decline. Pinterest now expects its total revenue for 2019 to fall between US$1.10 billion and US$1.115 billion. This revised forecast, while a slight upward adjustment from its previous guidance of US$1.095 billion to US$1.115 billion, remained marginally below the US$1.12 billion that analysts had been projecting.
Widening Net Loss Exacerbated Investor Concerns

Beyond revenue figures, Pinterest reported a substantial increase in its net loss. The company's net loss widened to US$124.7 million in the third quarter, a significant increase from the US$18.9 million loss recorded in the same period a year prior. This widening loss, coupled with a near doubling of total costs and expenses to US$413.4 million, indicated increased investment and operational costs that impacted profitability.

Reading history

Hide →

This history is cleared when the page is closed.

Why did Pinterest’s shares drop 19% after the earnings report?

Loading

Was this article helpful?

Helpful

Not helpful

Report an issue

1

0

0

Share with friends