(Bloomberg) -- Pinterest Inc. warned that revenue in the current quarter will be lower than analysts’ predictions, sending the shares on their biggest plunge in more than a year.
Pinterest expects third-quarter revenue of $885 million to $900 million, lower than analysts’ estimates of $907.7 million. Chief Financial Officer Julia Brau Donnelly cited several factors for the weak guidance, including foreign currency exchange rates, as well as food and beverage advertisers spending less than expected, during a call with analysts.
Donnelly also reminded investors that Pinterest does not sell political advertisements, which could put them at a slight disadvantage compared with industry peers.
The shares fell as much as 14% to $31.97 in New York trading on Wednesday, representing the worst intraday drop since April 2023. The stock had been little changed this year through Tuesday’s close.414526471
The San Francisco-based company has been working to boost revenue by encouraging direct shopping through its advertising, hoping to capitalize on people who search pinboard-style images for inspiration.
“Historically Pinterest was a great place for window shopping, but all the stores were closed,” Chief Executive Officer Bill Ready said in an interview. “As we’ve been making it so that you can easily take action on the things you find in Pinterest, that’s driving a lot more shopping behavior.”
Revenue rose 21% to $854 million in the period ended June 30, the company said Tuesday in a statement. Analysts surveyed by Bloomberg had predicted sales of $848 million on average. The company now has 522 million global monthly users, up 12% from a year ago and slightly higher than the average analyst estimate of 518 million users.
The second quarter was the third straight in which ad clicks on Pinterest have doubled year-over-year, Ready said. He credits this jump in ad clicks to improved AI tools that better personalize ads to users’ aesthetics, and to a larger inventory of advertisements thanks to deals with Amazon.com Inc. and Alphabet Inc.’s Google.
Ready also said that Gen Z users are the company’s fastest growing demographic, continuing to make up more than 40% of Pinterest’s total audience. The company is targeting younger users by making the platform more curated, shoppable and positive in comparison to other social media sites, he added.
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