Pinterest stock down 10% on disappointing Q4: should you buy?

Shares of Pinterest Inc (NYSE: PINS) lost over 10% in extended hours after the image sharing service reported disappointing results for its fourth financial quarter on a continued slowdown in advertising.

Pinterest stock slides on weak guidance

The stock is being punished also for the weaker-than-expected guidance.

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Pinterest is now calling for a low single-digit growth in its revenue in the current quarter. Reacting to it on Yahoo Finance, D.A. Davidson analyst Tom Forte said:

Digital advertising market remains challenging for the fiscal fourth quarter. That outlook is lower than the initial consensus and what we were looking for (more mid-single-digit growth). So, some challenging numbers from Pinterest.

Pinterest to buyback $500 million worth of its shares

Nonetheless, Pinterest did announce a $500 million share repurchase programme to cheer its shareholders. Lauding the strength of its balance sheet, Forte added:

If you go back to early pandemic, digital advertising was very weak, but rebounded significantly when we saw signs of economy improving. So, there’s an opportunity for Pinterest stock over the next twelve months on an improving economy.

But that’s yet to unravel. For now, the D.A. Davidson analyst is sticking to his “neutral” rating and $21 price target on this tech stock.

Key figures in Pinterest’s Q4 earnings print

• Earned $17.5 million versus the year-ago $175 million
• Adjusted EPS also tanked from 49 cents to 3 cents only
• Revenue climbed 4.0% year-on-year to $877.2 million
• Consensus was 27 cents a share on $888 million in revenue

Also on Monday, Pinterest said its CFO Todd Morgenfeld will exit the role on July 1^st.

Pinterest reports an increase in MAUs

The social media company ended the quarter with 450 million monthly active users (MAUs) – up 4.0% versus last year but missing expectations by 1.7 million.

Last week, Pinterest Inc announced plans of lowering its headcount by less than 5.0%. In the earnings press release, CEO Bill Ready said:

We’re staying focused on growing monetisation per user, integrating shopping throughout the core user experience, and increasingly driving operational rigour. While the industry as a whole is facing headwinds, we’re adapting quickly to a changing macro environment and are committed to creating a more positive online experience for our users and advertisers.

Pinterest stock is still up 8.0% for the year.