The news: Despite missing sales and profit projections as well as providing a disappointing third-quarter outlook, Pinterest shares rose on higher-than-expected user counts.
Behind the numbers: According to Pinterest, there are now 433 million monthly active users worldwide, down 5% from a year ago. That kind of fall is concerning for a social platform dependent on users to draw in advertising, although experts anticipated an even steeper drop to 431 million.
Zoom out: Pinterest’s far-from-stellar earnings come as other major players in the social media landscape have seen dismal results. But the company was buoyed by the presence of new CEO Bill Ready, a former head of Google’s commerce division and PayPal COO, whose hiring signals a stronger push toward social commerce.
Ready for commerce: Both Ready and Elliott Management noted that Pinterest occupies a unique position “at the intersection of social media, search, and commerce.” With more customers starting their shopping journeys online, the platform’s role as a tool for inspiration and product discovery gives it valuable insight into purchase intent, making it attractive to retailers.
With that data on hand, Pinterest is also leaning into personalization to make the user experience stickier and improve relevance.
On the other hand: While the company has rolled out a steady stream of social commerce features—from shoppable product pins to Shop tabs on business profiles and live shopping—it’s far from the most popular social commerce platform. More people use Facebook, YouTube, Instagram, TikTok, and Snapchat to shop than Pinterest, per an April survey by Klarna.
The Elliott connection: Elliott Management’s decision to take a stake in PayPal could be a sign it intends to push the company to acquire Pinterest, completing a takeover initially proposed at the end of last year.
The big takeaway: It’s unclear why Pinterest hasn’t made more substantial inroads into the digital advertising space. By measure of CPMs, Pinterest ads are 44% more affordable than Meta's, per Tinuiti data. As cost-conscious advertisers wary of uncertainty scrutinize their spends, Pinterest may be able to hold onto its existing advertisers—but getting new ones may be an issue without new users.
If Pinterest can grow its user base, it could have a bright future. But that’s a major if. Pinterest has the opposite problem of platforms like Instagram and YouTube: It is great at monetizing hardcore users, but has trouble convincing new audiences to join and engage with the platform.
It’s no surprise that as users shrink, Pinterest is leaning hard on personalization and social commerce to maximize revenues from existing users. But that strategy can only go so far, particularly when there are buzzier platforms equally capable of driving purchases. Its struggles to reach teen users, a hugely important audience for many brands, could further limit its ability to attract spend from retailers and advertisers.