Pinterest Tumbles Nearly 5% On Reports Of Facebook Releasing Rival App

The shares of Pinterest Inc. PINS tumbled in Thursday's trade as The Information reported that social media giant Facebook Inc. FB had launched a competing app.

What Happened

Facebook's "New Product Experimentation" team developed the app called "Hobbi," which lets users organize their photos into "visual collections," according to its description on the App Store, The Information reported Thursday.

The NPE team was instituted by Facebook in July last year, with the goal of developing useful consumer-facing applications. Facebook had said that the team would be working on a lot of projects, and discard the ones consumers don't find useful.

The Hobbi app was first made available in Colombia, Belgium, Spain, and Ukraine, according to CNBC, but was recently made available in the United States.

Not A Rival To Pinterest

A Pinterest spokesperson told CNBC that Hobbi is a different product than Pinterest.

"Upon first look, Hobbi appears to be a photo saving app that lacks the discoverability, search, and recommendations of Pinterest," the company said in a statement to CNBC.

"As described in the App Store, it's meant to help you document and remember the things you do, which is about the past, while Pinterest is about discovering ideas and inspiring action for the future."

TechCrunch. too, noted that Hobbi doesn't have a social media element like Pinterest, but is instead a photo organizer "designed to help hobbyists organize photos of their own projects into themed collections."

Price Action

Pinterest's shares closed 1.67% lower at $23.54 on Thursday. The stock extended losses in the after-hours session by 2.97%, trading at $22.84.