Shares of social commerce platform Pinterest (NYSE: PINS) fell 12.8% in the after-market session after the company reported first-quarter revenue that narrowly beat analysts' forecasts, and earnings per share (EPS) also exceeded expectations. However, Domestic MAUs slightly missed expectations and growth was tepid. Pinterest expects that Q2 revenue will grow roughly in-line with what they saw in Q4 2022 and Q1 2023, which translates to 4-5% y/y growth. This missed expectations of roughly 6% y/y growth in Q2 2023 revenue. In addition, Pinterest expects Q2 non-GAAP operating expenses to grow low teens on a percentage basis quarter-over-quarter. This implies an operating profit guidance miss vs. expectations, which is another major negative. Lastly, Todd Morgenfeld, its finance chief and business operations leader, will depart the company on July 1, 2023.
What is the market telling us:
Pinterest's shares are somewhat volatile and over the last year have had 42 moves greater than 5%. But moves this big are very rare even for Pinterest and that is indicating to us that this news had a significant impact on the market's perception of the business. The previous big move was about 1 month ago, when the company gained 5.97% on the news that analyst Lloyd Walmsley of UBS upgraded the social media stock from Neutral to Buy and forecasted a more than 25% increase in the share value as the company advances its advertising plan.
Pinterest is up 0.48% since the beginning of the year, but at $23.12 per share it is still trading 20.6% below its 52-week high of $29.10 from February 2023. Investors who bought $1,000 worth of Pinterest's shares at the IPO in April 2019 would now be looking at an investment worth $942.62.
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