Pinterest’s Problems With Ads Hurt the Company’s Ability to Make More Money, and Its Stock Price Drops.

Pinterest's Problems with Ads Hurt the Company's Ability to Make More Money, and Its Stock Price Drops.

Thursday, Pinterest Inc. said that its second-quarter revenue growth would be lower than what Wall Street expected. This is because the image-sharing website is dealing with a drop in advertising spending, which sent its shares down 13% after the bell.

Pinterest said that the market for ads was getting more stable, but it also said that the market was still unsure. Snap Inc.’s shares dropped about 18% after the market closed because the company’s first-quarter sales were lower than expected, and the company warned that it could also miss expectations for the second quarter.

In a weak economy, smaller digital ad sellers like Pinterest and Snap are losing ground to big tech rivals like Alphabet and Meta Platforms. This is because marketers tend to stick with platforms they know and trust. This is because sales were good during the pandemic when advertisers spent a lot of money to reach buyers online.

In order to grow its ad business, Pinterest also said it was opening up third-party ad demand. This means that other companies will be able to serve ads on Pinterest. It said that Amazon would be its first partner, and it plans to add more brands and goods to its platform in the future.

Pinterest's ad woes hurt revenue growth, shares slump

Angelo Zino, a senior equity analyst at CFRA Research, said, “We think recently hired CEO Bill Ready is looking for ways to better use its platform for e-commerce, making it easier for customers who use the platform to shop.”

CEO Ready said that the company was using next-generation artificial intelligence (AI) to improve things like recommendations and ads on the site.

Refintiv data shows that the number of monthly active users (MAUs) on the image-sharing site that lets people make online pinboards grew by 7% to 463 million, which is more than the estimate of 454.03 million.

In the first quarter, which finished on March 31, the company’s sales went up by 5%, to $602.58 million. Refinitiv data shows that analysts had expected an average of $592,99 million.

Pinterest said it expects revenue growth in the current quarter to be the same as in the first quarter and fourth quarters of 2022. In the fourth quarter, sales grew by 4%. Refinitiv data shows that Wall Street thought growth would be 6.15 percent.

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