Pinterest (PINS) stock plunged more than 14% out of the gate Friday after the do-it-yourself (DIY) social media platform beat top- and bottom-line expectations for its third quarter but provided an outlook for its fourth quarter that failed to impress.
In the three months ended September 30, Pinterest's revenue increased 17.7% year over year to $898 million, boosted by a more than 11% rise in global monthly active users to 537 million. Its earnings per share (EPS) were up 48.2% from the year-ago period to 40 cents.
"We delivered another strong quarter with users reaching another all-time high of 537 million and revenue growth at 18%," said Pinterest CEO Bill Ready in a statement. "Our artificial intelligence (AI) investments are driving results by powering better personalized experiences and greater performance for advertisers, with our lower-funnel ad tools being the fastest-growing part of our business. Advertisers are increasingly relying on Pinterest to engage our growing audience who see us as a great place to find inspiration, curate and shop."
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The results beat analysts' expectations. Wall Street was anticipating revenue of $896 million and earnings of 34 cents per share, according to CNBC.
However, sentiment turned negative toward Pinterest when it provided its outlook for the fourth quarter. The company expects to achieve revenue in the range of $1.125 billion to $1.145 billion, representing growth of 15% to 17% from the year-ago period. The midpoint of this range, $1.135 billion, came up short of the $1.143 billion in revenue analysts are anticipating.
Is Pinterest stock a buy, sell or hold?
It's been a volatile year on the price charts for Pinterest. Indeed, shares were up more than 21% for the year to date back in June, but are currently down 20.6% since the start of January. Still, Wall Street remains bullish on the communication services stock.
According to S&P Global Market Intelligence, the average analyst target price for PINS stock is $41.92, representing implied upside of about 45% to current levels. Additionally, the consensus recommendation is Buy.
Not everyone is all in on the large-cap stock, though. Financial services firm Wedbush maintained its Neutral rating (equivalent to a Hold) on Pinterest after earnings, but raised its price target to $38 from $37.
"We think Pinterest is likely to achieve revenue growth closer to the range of its longer-term target (mid-to-high teens CAGR over the next 3–5 years)," says Wedbush analyst Scott Devitt. "That said, management continues to demonstrate strong execution against its user engagement and monetization strategy, with several early initiatives in place to drive growth over the intermediate-term."
For now, though, investors will debate the sustainability of high revenue growth against higher comparisons, the impact of more ads on user engagement, and headwinds from weakness in the food and beverage category, Devitt says.
Related Content
-
Is Delta's New AI Pricing Bad News for Your Wallet?Delta is using AI to "personalize" the price you pay for airfare. Here's what that could mean for your next trip.
-
The 10 Places Where Social Security Covers the Most (and Least) Of Your ExpensesOn average, Social Security covers 30.11% of retirees’ spending. Fortunately, there are places where those dollars will stretch further and cover more of your spending.
-
Are Buffett and Berkshire About to Bail on Kraft Heinz Stock?Warren Buffett and Berkshire Hathaway own a lot of Kraft Heinz stock, so what happens when they decide to sell KHC?
-
How Divorced Retirees Can Maximize Their Social Security Benefits: A Case StudySusan discovered several years after she filed for Social Security that she is eligible to receive benefits based on her ex-spouse's earnings record. This case study explains how her new benefits are calculated and what her steps are to claim some of the money she missed.
-
From Piggy Banks to Portfolios: A Financial Planner's Guide to Talking to Your Kids About Money at Every AgeFrom toddlers to young adults, all kids can benefit from open conversations with their parents about spending and saving. Here's what to talk about — and when.
-
I'm an Investment Pro: Here's How Alternatives Could Inject Stability and Growth Into Your PortfolioAlternative investments can often avoid the impact of volatility, counterbalancing the ups and downs of stocks and bonds during times of market stress.
-
Dow Bleeds Red Due to Big Blue: Stock Market TodaySix of the official GICS sectors were in the green, led by communications services, technology and energy stocks.
-
July Fed Meeting: Live Updates and CommentaryThe July Fed meeting could be a lively economic event, with Wall Street keyed into what Fed Chair Powell has to say about interest rates and President Trump.
-
A Contrarian Approach Pays Off for This Small-Cap FundSmall-cap stocks have been hit hard by tariff worries, but this T. Rowe Price fund has outperformed thanks to its manager's against-the-tide approach.
-
A Financial Planner's Guide to Unlocking the Power of a 529 Plan529 plans are still the gold standard for saving for college, especially for affluent families, though they are most effective when combined with other financial tools for a comprehensive strategy.
