Pinterest Inc. (PINS) experienced a volatile session on Friday, with shares declining 2.9% to close at $20.05. Despite this drop, the stock managed to end the holiday-shortened week with a 3.9% gain, buoyed by a strong first-quarter earnings report that exceeded expectations.
The company reported first-quarter revenue of $1.008 billion, representing an 18% year-over-year increase. Global monthly active users rose 11% to 631 million, signaling continued platform engagement. Adjusted EBITDA came in at $207 million, reflecting operational improvements. Additionally, Pinterest's aggressive share buyback program has reduced outstanding shares by approximately 16% from the previous quarter, providing further support to earnings per share.
However, the stock remains under pressure, trading 22.6% lower year-to-date and roughly 50% below its 52-week high of $39.93. The broader market rally, with the S&P 500 notching a nine-week winning streak and the Nasdaq up 16% for the year, has not fully lifted Pinterest's fortunes.
Analysts are divided on the stock's trajectory. Wells Fargo's Alec Brondolo maintains an Overweight rating with a $28 price target, while JPMorgan's Doug Anmuth remains Neutral at $25. Piper Sandler's Thomas Champion also holds a Neutral stance with a $26 target. The mixed sentiment reflects ongoing concerns about advertising revenue growth and competitive pressures from larger players like Meta and Alphabet.
Pinterest's second-quarter revenue guidance ranges from $1.133 billion to $1.153 billion, with adjusted EBITDA between $256 million and $276 million. CEO Bill Ready emphasized the company's focus on converting user engagement into revenue, noting that about 30% of lower-funnel ad revenue now utilizes Performance Plus, Pinterest's automated advertising system. However, he acknowledged that adoption is still early, and execution risks remain.
Legal challenges also loom. Levi & Korsinsky announced that investors have until May 29 to seek lead plaintiff status in a securities class action involving Pinterest shareholders from February 2025 to February 2026. The lawsuit centers on claims about ad revenue strength and tariff-related issues.
Advertising pricing pressures persist, with first-quarter ad impressions up 24% but ad prices falling 5%. CFO Julia Brau Donnelly noted that large retailers continue to face margin pressure from tariffs, though she observed some stability. If ad prices remain low or major retailers reduce spending, user growth alone may not sustain the recovery.
Looking ahead, Pinterest's performance will be influenced by broader market dynamics, including the upcoming June 5 payrolls data, bond yields, and tech earnings such as Broadcom. A strong jobs report combined with persistent inflation could shift Federal Reserve policy expectations, impacting growth stocks like Pinterest.
In the near term, Pinterest's stock may remain range-bound as investors weigh the company's fundamental improvements against external headwinds. The $20 level could act as a key support, but renewed selling pressure could emerge if ad demand weakens or macroeconomic conditions deteriorate.
