Pinterest shares experienced a sharp decline on Tuesday, falling approximately 6% to trade at $18.74 by 3:05 p.m. EDT. This drop completely erased the gains the stock had made following its earnings report in May. The stock hit an intraday low of $18.46 before recovering slightly, but it remains about 16% below its post-earnings close of $22.28 on May 5.
The decline outpaced losses in other social media stocks, including Meta, Snap, and Reddit, as broader market indexes also slipped. The Nasdaq Composite fell 0.52%, while the S&P 500 dropped 0.39% on the day. All three peer companies traded lower in afternoon trading as well.
Pinterest's first-quarter results, released earlier this month, showed revenue of $1.008 billion, up 18% year-over-year. Global monthly active users increased 11% to 631 million. However, the company reported a GAAP net loss of $74 million, while adjusted EBITDA came in at $207 million. The adjusted EBITDA figure excludes interest, taxes, depreciation, amortization, and other items.
CEO Bill Ready highlighted a strong start to 2026, citing gains from visual search products. He noted that the company continues to develop an AI-powered advertising platform that automates ad creation, targeting, and delivery. This technology is expected to enhance efficiency for advertisers.
Pinterest provided second-quarter revenue guidance in the range of $1.133 billion to $1.153 billion, representing 14% to 16% growth year-over-year. The company also forecast adjusted EBITDA between $256 million and $276 million. This outlook came in above analyst expectations, which initially drove the stock higher after the earnings release on May 4.
Management is betting that increased automation in ad products and a broader advertiser base, including small and mid-sized businesses, can offset weaker spending from major retail brands facing tariff pressures and higher costs. Large advertisers remain important for stability but are not the primary growth driver, according to Lenny Zéphirin, principal and analyst at The Zéphirin Group.
Competition in the digital advertising market remains intense. Meta's scale continues to attract ad dollars, even in challenging market conditions. Reddit is investing in AI-powered ad technology, while Snap has signaled slower growth in North America and geopolitical headwinds. Snap's recent results did not match the revenue gains seen at Meta, Pinterest, and Reddit.
Pinterest has a significant share repurchase program in place. The company completed approximately $2 billion of buybacks in the near term, backed by Elliott Investment Management, which took a $1 billion position linked to a broader $3.5 billion buyback program. This provides a buffer for the stock, but downside risks remain.
If brands or retailers cut spending further due to tariffs or soft demand, Pinterest may struggle to convert its growing user base into higher advertising revenue. Larger platforms could capture more ad budgets if advertisers pull back. The company lists tariffs, weak global demand, advertiser churn, AI execution, and competition as key risk factors in its filings.
Despite stronger user numbers, a higher near-term revenue forecast, and activist-backed buybacks, Pinterest stock dropped Tuesday. The earnings report showed solid fundamentals, but investors remain cautious, waiting to see if ad growth can sustain beyond a single quarter.
