New buyback plan fails to calm Pinterest investors

• Pinterest‘s fourth-quarter revenue forecast disappointed investors, with its outlook failing to meet expectations for a holiday season boost.
• Despite launching new AI tools with the Performance+ suite, Pinterest faces tough competition from larger platforms like Meta and struggles with weaker ad spending in certain sectors.

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What happened

Pinterest’s fourth-quarter revenue forecast fell short of investor expectations, causing its stock to drop by 11%. Despite strong ad growth from major companies like Google, Meta, and Snap, Pinterest’s outlook for the holiday season failed to impress, with a forecast of $1.13 billion to $1.15 billion—just in line with analysts’ predictions but lacking a significant holiday boost. CFO Julia Donnelly noted that its new Performance+ suite, launched in October, is still in the early rollout phase, limiting its impact during the holiday season. Pinterest is also seeing weaker ad spending in the food and beverage sector. The company announced a $2 billion stock buyback program, replacing an earlier plan with $500 million unspent. Pinterest faces stiff competition from meta-owned platforms like Facebook and Instagram, which dominate the ad market due to their larger user bases, presenting ongoing challenges for the smaller platform.

Also read: Pinterest stock plunges despite Q3 revenue increase

Also read: Pinterest stumbles with weak holiday forecast, trails big rivals

Why it is important

This story highlights Pinterest’s struggle to capitalise on the holiday shopping season, as its fourth-quarter revenue forecast missed investor expectations. While Google, Meta, and Snap reported strong ad growth, Pinterest’s modest forecast led to an 11% share drop.

As advertisers gravitate towards larger platforms like Facebook and Instagram, Pinterest must fight for market share. Its new AI-based Performance+ suite is in its early stages, and with food and beverage ad revenue lagging, the company faces steep challenges. Rising expenses from AI investments add pressure, making this story relevant for investors and marketers tracking digital ad trends and competition for ad dollars.