Pinterest stock rockets 18% after earnings beat, advertising outlook

The company’s Monday earnings announcement beat expectations for earnings and revenue, and it included strong user engagement data.

CEO Bill Ready said some of the advertisers that had temporarily paused spending on Pinterest due to the Israel-Hamas war had already returned.The company posted an adjusted earnings per share of 28 cents, beating the LSEG estimate of 20 cents. Pinterest also soundly beat revenue expectations, reporting $763.2 million, versus analysts’ estimates of $743.5 million.

For much of earnings season, the market has been skittish toward companies reliant on ad revenue due to the unclear future effects of the Israel-Hamas war.projections but saw its stock dip due to its wider guidance range for fourth-quarter revenue, after finance chief Susan Li said it “observed softer ads in the beginning of the fourth quarter.”

CEO Bill Ready said Pinterest is not immune to those concerns, but he noted on the earnings call that some of the advertisers that had initially paused spending after the onset of the war have already returned. That, combined with strong engagement numbers, appears to have gone a long way for investors.

Pinterest’s mobile deep linking ad product was also a highlight, due to its more than 200% increase in the conversion rate, wrote the Barclays analysts. Pinterest also reported promising numbers on engagement, along with monthly active user growth of 8% year over year.

“As we enter 2024, we believe there are multiple catalysts ahead around engagement growth, ads innovation, the scaling of its Amazon partnership, and consistent margin expansion,” Citi analysts wrote in a note to investors.Another tailwind for Pinterest is the growing number of Gen Z members using the app. Citi analysts noted that as of June 2023, Gen Z accounted for 42% of monthly active users, and younger users saved roughly twice as much content in their first year on Pinterest.

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