Pinterest shares up 20% despite missing earnings estimate: here’s why

Pinterest Inc (NYSE: PINS) jumped more than 20% in extended trading on Monday even though its quarterly earnings and future guidance came in shy of Street estimates.

Why are Pinterest shares up after the bell?

Investors are focusing on the global active users that remained unchanged from a quarter ago. In comparison, experts had forecast a sequential decline. Reacting to the earnings report on CNBC’s “Closing Bell”, Rick Heitzman (Founder of FirstMark Capital) said:

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Pinterest is still early in its monetisation strategy. It’s in a unique place as about 0.5 billion MAUs come directly to Pinterest. So, in a world where privacy matters and ad units are moving towards direct response going to recession, they’re able to capture that intent. They’re in a sweet spot among all these media players in how they react to their customers and the ability to monetise them.

He’s also convinced that the new CEO (Bill Ready) can turnaround this company. Pinterest shares are still down nearly 35% for the year.

Pinterest Q2 earnings snapshot

  • Lost $43.1 million that translates to 7 cents a share
  • EPS of 11 cents was well below last year’s 25 cents
  • Sales jumped 9% to $665.9 million, per the earnings press release
  • Consensus was 18 cents of adjusted EPS on $665 million in sales
  • Global active users shrunk 5.0% YoY to 433 million
  • Average revenue per user (ARPU) climbed 17% to $1.54

What else was noteworthy?

Pinterest shares are also up because activist investor Elliott Management today confirmed that it is now the largest shareholder of the social media company.

For the current financial quarter, Pinterest now forecasts a mid-single-digit growth in revenue. In comparison, analysts had called for $710 million in sales that represents a 12% YoY increase.

Wall Street currently has a consensus “hold” rating on Pinterest shares.

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