Pinterest stock sinks 20% after weak results, tariffs drag on ads

on Pinterest Its shares fell 20% on Wednesday after lackluster earnings in the third quarter as advertising was hit by major retailers grappling with tariffs.

The company reported earnings of 38 cents per share, while analysts polled by LSEG expected earnings of 42 cents per share. However, the platform’s revenue met analysts’ estimates of $1.05 billion.

“Tariff-related weakness has emerged for the first time in our digital advertising universe and will reinforce PINS’ lack of client diversification and higher macro sentiment for bears,” RBC wrote in an analyst note.

Third-quarter sales in the U.S. and Canada came in at $786 million, below StreetAccount’s estimates of $799 million.

Pinterest chief financial officer Julia Donnelly said during the earnings call that the company faced “modest spending on some ad spend” in the two countries during the quarter due to unnamed “major U.S. retailers” facing pressure on their margins from tariff-related issues.

Donnelly added that the company expects these trends to continue with President Donald Trump’s addition of a new tariff that will impact the home furnishings category.

Following the earnings report, many banks lowered their price targets, citing increased competition from larger social platforms like Instagram and TikTok and concerns about macro volatility.

Citi analyst Ronald Josey noted that the company’s international revenue “may stagnate or slow more quickly than expected.”

However, 81% of analysts still maintained an outperform or buy rating.

JPMorgan The stock remained overweight despite lowering its price target as the company pivots to more AI initiatives.

“We recognize that short-term macro pressure and PINS’ overexposure to major retailers and home furnishings could keep shares limited in the near term, but we remain constructive on PINS’ user growth, deepening engagement and overall monetization potential,” JPMorgan’s Doug Anmuth said. he wrote.

The company also issued a weak forecast for the fourth quarter, expecting revenue to be between $1.31 billion and $1.34 billion. The midpoint of that range, $1.325 billion, missed Wall Street estimates of $1.34 billion.

“I didn’t think they were as negative as people thought they were during the holiday season,” CNBC’s Jim Cramer said Wednesday on “Squawk on the Street.” “They are very quiet. [CEO] “Bill Ready is not a man who likes to talk about his books.”

Rosenblatt analyst Barton Crockett downgraded the shares from buy to neutral, citing concerns about how the company can compete against the increasing growth of chatbot capabilities.

“Chatbots do not have a meaningful place in the Pinterest space today,” Crockett wrote. “Google It has a similar service, Mixboard, that feels more like a test than a meaningful push. “But we believe it’s certainly possible that as chatbots increase advertising and content aimed at commercial consumers, Pinterest’s wheelhouse will become their wheelhouse.”

Bank of America analyst Justin Post noted that despite revenues falling short, the company continues to post steady growth and is “in the early stages of realizing AI-driven gains.”

Ready said in its earnings call that the company is working to integrate more artificial intelligence into the platform, including a new feature that will curate personalized dashboards for users. Pinterest also rolled AI-powered personal shopping assistant at the end of October.

“Our investments in artificial intelligence and product innovation are paying off,” Ready said in a statement. “We have become leaders in visual search and have effectively transformed our platform into an AI-powered shopping assistant for 600 million consumers.”