Shares of Pinterest Inc. plummeted approximately 20% in premarket activity Friday, following the social media platform's disappointing first-quarter revenue forecast. The stock dropped to around $14.80 after closing Thursday at $18.54.
Revenue Outlook Misses Estimates
The company anticipates Q1 revenue between $951 million and $971 million, falling short of the $980.1 million consensus estimate among analysts. Pinterest also expects adjusted EBITDA of $166 million to $186 million for the quarter. This guidance raises concerns about the resilience of digital advertising budgets, particularly from retail partners.
"Many of the largest retailers have been disproportionately impacted by tariffs and have been pulling back on advertising spend across the industry," Chief Financial Officer Julia Donnelly stated during the post-earnings conference call. The company reported strong full-year 2025 results with revenue reaching a record $4.2 billion, a 16% year-over-year increase, and Q4 revenue of $1.319 billion, up 14%.
Strategic Shifts and Cost-Cutting
Concurrently, Pinterest is implementing restructuring measures to redirect resources toward artificial intelligence initiatives. The company announced in January plans to reduce its workforce by under 15% and close some smaller offices acquired through past deals. These moves are expected to result in $35 million to $45 million in pre-tax restructuring charges, with the process scheduled for completion by the end of the third quarter.
"Many companies are having to show investors that their substantial spend on AI is worth it," noted Danni Hewson, head of financial analysis at AJ Bell. Pinterest is banking on its AI-powered Performance+ advertising products to attract marketer dollars, even as competitors like Snap and Reddit report stronger AI-driven updates.
Analyst Reactions
Wall Street analysts responded swiftly to the guidance. UBS significantly reduced its price target on Pinterest to $26 from $40 but maintained a Buy rating. Conversely, Baird downgraded the stock to Neutral and lowered its target to $20.
Investors are now closely monitoring whether Pinterest's user growth—which reached 619 million global monthly active users in Q4, up 12%—can sustain its monetization efforts amid advertising headwinds. The market will also scrutinize regional advertiser demand and the conversion performance of the new Performance+ platform.
The broader market awaits the January U.S. Consumer Price Index report, due at 8:30 a.m. Eastern, which could influence rate expectations and risk sentiment. Pinterest begins regular trading at 9:30 a.m. ET.
