Pinterest Reports Healthy Q3, Q4 Guidance Disappoints: 6 Analysts Cut Forecasts — Will AI Tools 'Start To Help' In 2025?

Shares of Pinterest Inc PINS tumbled in early trading on Friday, after the company reported downbeat third-quarter earnings.

The company reported its results amid an exciting earnings season. Here are some key analyst takeaways.

• Piper Sandler analyst Thomas Champion maintained an Overweight rating and reduced the price target from $45 to $41.
• JPMorgan analyst Doug Anmuth reiterated a Neutral rating and cut the price target from $38 to $35.
• BofA Securities analyst Justin Post reaffirmed a Buy rating and slashed the price target from $45 to $39.
• Wedbush analyst Scott Devitt maintained a Neutral rating, but lifted the price target from $37 to $38.
• Roth Capital Partners analyst Rohit Kulkarni reiterated a Neutral rating and trimmed the price target from $39 to $33.
• Raymond James analyst Josh Beck reaffirmed an Outperform rating and cut the price target from $40 to $34.
• Oppenheimer analyst Jason Helfstein maintained an Outperform rating and revised the price from $45 to $40.
• Benchmark analyst Mark Zgutowicz reiterated a Hold rating on the stock.

Check out other analyst stock ratings.

Piper Sandler: Pinterest reported third-quarter revenues of $898 million, up 18% year-on-year and around 1% higher than Street expectations, Champion said in a note. He added, however, that the fourth-quarter guidance of 15%-17% represents another deceleration.

While EBITDA of $242 million was above estimates, the company's year-on-year margin expansion is slowing, the analyst stated. "Users improved across all geographies, with y/y growth decelerating slightly on a 1% tougher comp," he further wrote.

JPMorgan: Pinterest's stock declined in the after-hours trading session as the company's revenue growth guidance "fell shy of investor expectations," Anmuth said. Although Pinterest indicated that macro trends "are mostly stable," but persistent Food & Beverage pressure could weigh on revenue growth into the holiday season, he added.

Pinterest launched its Performance+ AI suite, "which provides AI/automation tools across bidding, budgeting, & targeting," which is driving higher cost per action (CPA) and return on ad spend (ROAS), the analyst stated. "We remain Neutral-rated & look for stronger growth & execution to become more constructive," he further wrote.

BofA Securities: Although Pinterest's third-quarter revenues were broadly in-line with Street expectations, the performance was disappointing, "given beats at peers," Post said. "While Pinterest’s 18% growth was likely above industry, food and beverage category weakness was likely a 4pt headwind, bigger than peers," he added.

The company's fourth-quarter revenue guidance of $1,125-$1,145 million represents 15%-17% year-on-year growth but came in slightly below consensus and the high end of the range "suggests 1pts decel. on 1pt tougher y/y comp," the analyst stated. While management expects contribution from AI tools to "start to help" in the first half of 2025, the first-quarter revenue comp "is very difficult," he further wrote.

Wedbush: Pinterest reported "healthy" third-quarter results and provided guidance for the fourth quarter that was broadly in-line with estimates, Devitt said.

Investors remained concerned about the company's ability to sustain high-teens growth in 2025 against tougher comps, the impact of rising ad loads on user engagement metrics, and continued headwinds from weakness in the food & beverage category, the analyst stated. "We think Pinterest is likely to achieve revenue growth closer to the range of its longer-term target (mid-to-high teens CAGR over the next 3-5 years)," he further wrote.

Roth Capital Partners: Pinterest reported a small beat on revenues but missed EBITDA expectations, Kulkarni said. "Mgmt. seemed upbeat about growing bottom-of-funnel ad revs, AI-driven content recommendation, and Performance+ adoption since Oct 1st general availability," he added.

In in search results, average ad relevance has more than doubled over the past two years, and search accounts for two-thirds of Pinterest’s business, the analyst stated. "Pinterest is leveraging AI to flex up ad load during moments of high intent, allowing ad load and engagement to grow in tandem," he further wrote.

Raymond James: Pinterest's performance in the third quarter showed "signs of progress against key initiatives" related to artificial intelligent and deep learning as well as improving engagement, Beck said. He added, however, that the visibility into shopping ad gains and recovery in the Food & Beverage category remain "somewhat limited."

The company's fourth-quarter guidance fell short of expectations and was below 2023 seasonality, possibly due to "a full quarter of ongoing F&B headwinds," the analyst stated. "We had previewed a mixed setup for PINS flagging a decel in F&B sales projections, but didn't necessarily expect the headwinds (trade-down, promos, inflation) to persist," he further wrote.

Oppenheimer: While growth in Pinterest's monthly average users (MAUs) in North America remained flat at 3%, that in Europe decelerated to 9% from 10% in the second quarter, Helfstein said. This was the fourth consecutive quarter where outbound clicks to advertisers grew by 2x year-on-year, he added.

Advertisers using Performance+ (AI product suite) are seeing 20% average improvement in cost per action, the analyst stated. He expects revenue growth to decelerate to 10% year-over-year in the first quarter of 2025, but to ramp through the year.

Benchmark: Management indicated continued weakness in the Food and Beverage vertical and "suggested a more deliberate rollout and subsequent uptake of Performance+ beginning in ‘25E," Zgutowicz said. Pinterest also expects new budget spend to be limited for products like Performance+ during the holiday period, he added.

"Continued expanding 3P ad supply dynamics kept impression growth (+41% y/y) elevated and pricing (-17% y/y) decelerating in 3Q, a trendline we expect to continue the next few quarters," the analyst wrote. Although Pinterest's MAU continues to increase, excessive ad load could soon begin negatively impacting engagement, he further stated.

Price Action: Shares of Pinterest had declined by 16.27% to $28.62 at the time of publication on Friday.

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