Pinterest, Inc. (NYSE: NYSE:PINS) shares tumbled 12% in premarket trade Wednesday after the company offered a softer-than-expected outlook for its third quarter.
Q2 revenue rose 21% to $854 million, surpassing analyst projections of $848.75 million. The social media company also reported a slight beat on adjusted earnings per share (EPS) at $0.29, a cent higher than the consensus estimate of $0.28.
Pinterest achieved a record 522 million global monthly active users, marking a 12% increase from the previous year.
CEO Bill Ready highlighted the company's successful monetization efforts, noting improved advertiser performance and increased share of advertising budgets from large brands, attributing this success to the rollout of AI-powered products and experiences.
Looking ahead, Pinterest anticipates third-quarter revenue to be in the range of $885 million to $900 million, representing a year-over-year growth of 16-18%.
This forecast falls short of the analyst consensus of $908 million, triggering a significant downturn in the company's stock price.
Following the report's release, KeyBanc Capital Markets analysts trimmed their price target on PINS shares from $45 to $43 but maintained a positive outlook on the stock.
"We view Pinterest as the latest earnings season example where expectations got a little too elevated into the print, such that results and guidance were not
quite as strong as investors had hoped," they wrote.
"Our sense is Street expectations should rationalize after this print, allowing room for new products (e.g., Performance Plus) and partnerships to become more substantial contributors over the medium term."
Analysts at Stifel offered similar comments as they "continue to believe there is plenty of room for numbers to work higher over the next ~18 months," primarily due to the ongoing ramp for 3P and their bullish expectations for the Performance+ product.