Pinterest drops 19% on disappointing user growth in the first quarter

Pinterest Inc. (NYSE: PINS) released its first-quarter earnings report on Tuesday that pushed the stock around 19% down in extended trading on lower than expected growth in the company’s user base in the first quarter.

Pinterest’s Q1 financial results versus analysts’ estimates

According to Refinitiv, experts had forecast the company to print £218.39 million in revenue in Q1. Their estimate for loss per share was capped at 7 pence. In its report on Tuesday, Pinterest topped the estimate for revenue posting a higher £219.92 million in the second quarter but the loss per share came in slightly wider at 8 pence.

At 367 million, Pinterest’s monthly active users (MAUs) were reported 26% higher as compared to the same quarter last year. On an annualized basis, the company recorded an identical growth rate in MAUs in 2019’s fourth quarter.

In the United States, Pinterest posted a 6% growth in monthly active users. In the fourth quarter last year, the annualized growth in the company’s user base was noted at a higher 8%.

In comparison, Pinterest’s digital marketing competitors like Snap, Google, and Facebook saw significant growth in user base in the recent quarter as the Coronavirus pandemic restricted people to their homes.

COVID-19 has so far infected more than 1.2 million people in the U.S and caused over 72,000 deaths.

Pinterest’s Q1 revenue was roughly 35% up as compared to the year-ago figure. As per CFO Todd Morgenfeld, however, the company saw an 8% year over year decline in revenue in April. Morgenfeld further commented on the earnings report on Tuesday and said:

“While we’ve been adapting to the current environment, we will continue to invest in our strategic priorities of content, ads diversification, use case expansion and shopping. We’re committed to delivering inspiration to our users and measurable results to businesses.”

Pinterest’s performance in the stock market

Pinterest closed the regular session on Tuesday around 3% down. In after-hours trading, the stock plunged sharply to £14 per share that translates to a decline of around 8% in 2020 so far. Pinterest had dropped to as low as £9 per share in March.

The U.S social media, web and mobile application company went public in April 2019 when its shares were priced at £19.73. The company, however, closed the year around 25% down in December.

At the time of writing, Pinterest has a market cap of £9.79 billion.