Pinterest shares fell almost 17 percent on Friday, following the company’s announcement that it was experiencing tariff-related shocks in the disappointing fourth-quarter earnings.
The social media company’s Q4 earnings dropped below analysts’ estimates, with revenue of $1.32 billion in comparison to LSEG’s consensus projects up to $1.33 billion. The net income for the quarter slipped 85 percent to $277 million from $1.85 billion in the previous year.
It posted $541.5 million in adjusted earnings before interest, taxes, depreciation, and amortization, or EBIDTA, lower than the $550 million that analysts were estimating.
However, Pinterest anticipates that its sales will range between $951 million and $971 million in the first quarter, less than the predictions of the analysts about $980 million.
CEO Bill Ready stated that the company “absorbed an exogenous shock this year related to tariffs” and was more exposed to limited advertising spend from large retailers.
Pinterest also reported that it plans in January to lay off less than 15 percent of its workforce and reduce its office space in January in a bid to go all in on AI. It added that it’s “reallocating resources” to AI-focused teams and prioritizing “AI-powered products and capabilities.”
In a Friday note, Citi stated that it was reducing shares of Pinterest from Buy to Neutral, “given more limited visibility from larger UCAN & EU advertisers due in part to tariffs and challenges across specific verticals,” such as home furnishing, the rebuilding of its go-to-market sales function as Pinterest expands its advertiser base, and greater investments impacting margins.
Goldman Sachs analysts reported in a note on Friday that Pinterest will keep facing pressure on its revenue performance due to macro-related headwinds, including tariffs and consumer spending.
They indicated, “Despite these near-term headwinds, management remains optimistic around its long-term growth strategy centered around diversifying its advertiser base, automation, and performance-oriented objectives.”
The analysts have observed that the user growth is especially high among Gen Z users. The company said that its fourth-quarter users worldwide monthly active users increased 12 percent year-on-year to 619 million, the highest amount ever.
