Pinterest Stock Soars 11% on Strong Q1 Revenue Projections
Pinterest's stock surged over 11% on Friday, driven by solid quarterly revenue projections that reassured investors amidst uncertainties surrounding advertising spend on the platform in an unstable global economic environment.
With a robust top-line performance in Q1, Pinterest is on par with Reddit and Meta, which also posted strong results, despite growing global trade tensions affecting marketing-dependent companies.
The evolution of US trade policy, combined with escalating geopolitical tensions, is fueling fears of inflation and a possible recession, which are curbing consumer and business spending.
However, Pinterest is pulling ahead thanks to continuous improvements in its artificial intelligence (AI) tools for advertising campaigns and a growing user base, particularly among Gen Z. These factors make it a prized platform for advertisers.
The number of monthly active users worldwide by 10% year to reach 570 million in Q1, exceeding market expectations.
Pinterest's AI-driven and international expansion strategy is bearing fruit. However, the platform has observed a decline in e-commerce advertising spend from Asian players, following the removal of the minimis duty exemption earlier this year. This measure has led e-commerce giants like Temu or Shein to revise their advertising spend downward.
Analysts anticipate a deterioration in e-commerce advertising trends in the coming months, should tariff hikes affect consumption.
If the stock's progress is confirmed, it could see its market capitalization increase by nearly $2 billion.
Currently, the company is trading at 14.51 times its estimated earnings over the next 12 months, compared to 67.65 for Reddit and 22.19 for Snap Inc.
