Activist investor Elliott invests $1 billion in Pinterest, shares up nearly 8%
Pinterest said in a statement that activist investor Elliott Investment Management invested $1 billion in Pinterest Inc., with funds designated to support the social media company’s years-long share buyback efforts.
The announcement sparked a rally, with the company’s shares opening up 7.6% on Tuesday; This reflects investors’ strong optimism regarding Elliott’s involvement.
Visual search and discovery platform Pinterest is headquartered in San Francisco and has more than 600 million monthly active users worldwide, according to the company.
Pinterest CEO says new investment is a strong vote of confidence
The latest share buybacks will be carried out as part of a new $3.5 billion program approved by Pinterest’s board on Tuesday, according to a statement from the company. Additionally, Pinterest plans to repurchase up to $500 million in additional shares using cash on hand.
“Elliott’s investment is a strong vote of confidence in the work we’re doing to grow our business and the significant opportunities ahead for Pinterest,” Pinterest Chief Executive Officer Bill Ready said in a statement.
Meanwhile, Elliott, who bought shares in Pinterest for the first time in 2022, also expressed his confidence in the company. “We have been steadfast supporters of Pinterest since we first invested in 2022 and have strong belief in the company’s direction,” said Marc Steinberg, Partner at Elliott and member of Pinterest’s Board of Directors.
Under the terms of the investment, Elliott will purchase $1 billion of Pinterest’s convertible senior notes; The initial conversion price for these notes will be approximately $22.72 each, representing a 30% premium to Monday’s closing price. The bond will mature on March 1, 2031 and will bear interest at an annual rate of 1.75%.
Pinterest shares under pressure
Pinterest shares have been under constant pressure in recent months. Its shares posted their steepest monthly decline in more than three years last month after the company issued a weaker-than-expected quarterly sales forecast.
The company reported Q4 earnings last month, with revenue rising 14% to $1.32 billion from $1.15 billion a year earlier. However, this figure was below analysts’ estimate of $1.33 billion, according to FactSet.
Pinterest said it expects growth to slow further in the current first quarter, forecasting growth to be between 11% and 14%. The company is expected to generate revenue between $951 million and $971 million, according to the WSJ.
In late January, the company cut hundreds of jobs as part of a strategic shift to prioritize investment in artificial intelligence products. Bloomberg reported. Pinterest generates almost all of its revenue from advertising and is increasingly positioning itself as a visual search engine and discovery platform.
The company’s shares have fallen 17% in the last month. It’s down almost 49% in the past year, including a drop of over 50% in the last six months. Year-to-date, Pinterest’s shares are down 30.72%, according to data available on the New York Stock Exchange (NYSE).
