Pinterest Drops 12% Premarket Despite Beating Revenue Forecast
In a surprising move, Pinterest shares plummeted over 12% premarket on Tuesday, despite the company beating revenue forecasts and reporting a strong second quarter. The decline in stock price comes as a surprise, given the impressive results announced by the company. In this blog post, we’ll dive into the details of Pinterest’s Q2 earnings report and explore the reasons behind the sharp decline in stock price.
Revenue Beats Expectations
Pinterest reported a 17% year-over-year (YoY) jump in revenue to $998 million, exceeding the expected $973 million. This marks the company’s highest quarterly revenue ever, and a significant increase from the $850 million reported in the same period last year.
Earnings Miss Estimates
However, Pinterest’s earnings per share (EPS) of $0.33 missed estimates by $0.02, contributing to the decline in stock price. Analysts had expected EPS of $0.35, according to Refinitiv.
Costs Rise on AI and Infrastructure Spend
The company’s increased spending on artificial intelligence (AI) and infrastructure development appears to have played a significant role in the earnings miss. Pinterest has been investing heavily in these areas to enhance its user experience and improve its advertising offerings.
Monthly Active Users Hit a Record
Despite the earnings miss, Pinterest’s monthly active users (MAUs) hit a record 578 million, a 22% YoY increase. This marks a significant milestone for the company, highlighting its growing popularity and user engagement.
Q3 Revenue Guidance Beats Expectations
In a surprise move, Pinterest provided Q3 revenue guidance that exceeded expectations. The company expects revenue to range from $1.02 billion to $1.04 billion, beating analyst estimates of $984 million.
Retail Sentiment Turns Extremely Bullish
The sharp decline in Pinterest’s stock price has not deterred retail investors, who have turned extremely bullish on the company’s prospects. On Stocktwits, a popular platform for retail investors, sentiment has shifted from bearish to extremely bullish, with many users expressing optimism about the company’s future prospects.
Why is Pinterest Stock Out of Favor in Premarket Today?
So, why is Pinterest stock out of favor in premarket trading today, despite beating revenue forecasts and reporting a strong second quarter? According to a Stocktwits news article, the answer lies in the company’s earnings miss and increasing costs. The article suggests that Pinterest’s EPS miss, combined with rising costs, has spooked investors and contributed to the decline in stock price.
Conclusion
In conclusion, Pinterest’s Q2 earnings report was a mixed bag, with revenue beating expectations but EPS missing estimates. While the company’s increased spending on AI and infrastructure development is likely to pay off in the long run, it appears to have contributed to the earnings miss in the short term. Despite the decline in stock price, retail sentiment on Stocktwits has turned extremely bullish, suggesting that many investors remain optimistic about Pinterest’s prospects.
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