Pinterest reports revenue and user gains, but holiday forecast is lackluster

The news: Pinterest surged ahead of revenue expectations in Q3, but its steep spending increase and weak forecast for the holiday season could signal that the highly shoppable social media platform is struggling to gain ground with consumers.

By the numbers:

• Revenues: $898 million, up 18% YoY and above expectations of $896 million. Sales were up 18% YoY.
• Earnings per share: 40 cents versus expectations of 34 cents.
• Global monthly active users: 537 million, up 11% YoY.

Pinterest gave a Q4 guidance that fell below expectations, a sign that the holiday season might not provide the gains the shopping-focused social media platform needs to close the gap between itself and Meta.

Partnering up: Pinterest’s significant revenue gains can likely be attributed to its partnership with Amazon, which allows users to make purchases from the retail giant without leaving the app.

• That partnership gives Pinterest a powerful advantage in ecommerce and could help address the low consumer trust that hinders US social commerce efforts. Staples of social media, like in-app browsers, as well as consumer unfamiliarity with social shopping channels, have contributed to a perception that shopping on social media is unsafe.
• The company’s expenses show that it’s struggling to drive user and revenue growth without digging deep into its pockets. The upcoming holiday season should be a big opportunity for Pinterest to make inroads with consumers, but it may land softer than it would like.

Zooming out: Despite heavy spending that caused its stock price to tumble in pre-open trading, Pinterest’s revenue and user gains bookend a quarter where its secondary social media cohorts like Reddit delivered better-than-expected results. This reversed the narrative from Q2, when Meta surged far ahead of the pack.

Pinterest still has a major distinguishing factor thanks to its shoppability, but TikTok and Instagram pose a threat to that niche. If TikTok is banned, Pinterest will have to act fast to capture the void it leaves behind.