"Pinterest posted third-quarter revenue of $1.05 billion, up 17% year over year, helped in part by sharp growth in active users; the social media company's monthly active users reached 600 million, up 12% year over year. Profitability improved, too. The company recorded $92 million in generally accepted accounting principles ( GAAP) net income and $306 million in adjusted earnings before interest, taxes, depreciation, and amortization ( EBITDA), with free cash flow of $318 million. Those are solid numbers in an uncertain and somewhat choppy digital advertising environment."
"When it seemed like things couldn't get any worse, the stock collapsed. After a sharp rebound over the summer (from lows made during the tariff-driven sell-off in April) Pinterest's latest earnings report knocked the stock lower again. What spooked investors? Management issued worse-than-expected revenue guidance for the important holiday quarter. The stock's massive drawdown on Wednesday brings Pinterest's long, disappointing five-year return back into focus. Is the stock simply not investable?"
"If you think the market's reaction to the report is unfair, some perspective is in order. First, given that the company competes in the same space as social media and technology giants with far more resources, investors demand rapid growth from Pinterest. Without it, the market may start worrying that Pinterest's well-capitalized peers are simply too difficult to compete against."
Pinterest reported third-quarter revenue of $1.05 billion, a 17% year-over-year increase, with monthly active users reaching 600 million, a 12% gain. GAAP net income was $92 million and adjusted EBITDA was $306 million, while free cash flow totaled $318 million. Management guided fourth-quarter revenue to $1.313–$1.338 billion, implying 14%–16% growth, slightly below market expectations. Investors reacted negatively, sending the stock sharply lower and erasing recent gains. Market concerns center on Pinterest's need for rapid growth given competition from larger social and technology firms and the importance of a strong holiday quarter performance.
Read at The Motley Fool
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