Pinterest stumbles with weak holiday forecast, trails big rivals

1 month ago 7
  • Pinterest fell in late trading after forecasting weak sales for the holiday season as it faces stiff competition in a stabilizing digital advertising market
  • Pinterest will report fourth-quarter sales of $1.13 billion to $1.15 billion. The median of the range was below the average forecast of Wall Street analysts

What happened

Pinterest on Thursday (November 7) stated that its fourth-quarter sales are expected to reach between $1.13 billion and $1.15 billion. According to data compiled by Bloomberg, the midpoint of this range falls below Wall Street analysts’ average forecast. The stock fell as much as 14% in after-hours trading on Thursday. It had fallen more than 8% in the year leading up to the report.

Pinterest has lowered its holiday revenue forecast, signaling that this search and discovery network is struggling to keep pace with larger peers like Meta Platforms and Snap. The company anticipates modest revenue growth due to increasing competition from platforms such as Meta and TikTok. Its latest earnings report disclosed this outlook, highlighting the challenges it faces in maintaining user engagement and driving ad revenue. Larger rivals dominate these two key areas, including TikTok, along with Facebook and Instagram, both owned by Meta Platforms. As these platforms have a larger user base and higher targeted AD engagement, they are more favored by advertisers.

Also read: Pinterest Shares Tumble After Weak Holiday Forecast

Also read: Pinterest forecasts downbeat revenue as competition grows; shares slump

What it’s important

Pinterest’s underwhelming holiday forecast serves as a cautionary tale for small businesses and startups that depend on niche advertising channels. In an industry where major players like Meta and TikTok dominate user engagement and ad spend, smaller brands often rely on platforms like Pinterest for highly specific targeting and brand alignment with lifestyle-focused content. However, Pinterest’s slower growth and challenges in competing with these larger platforms raise concerns for small companies that depend on its unique user base for effective ad reach.

This trend emphasizes a crucial insight. As larger platforms continue to capture the lion’s share of digital advertising, smaller brands and startups may face rising challenges in maintaining visibility without joining these mainstream platforms. For example, a small eco-friendly startup like GreenNest, which offers sustainable home goods. GreenNest might initially see Pinterest as an ideal platform to reach eco-conscious, design-focused users. However, Pinterest’s struggle to keep up with the ad targeting precision and user engagement of bigger competitors. It may limit GreenNest’s reach and lead to higher acquisition costs, even on platforms aligned with its brand values.

Read Entire Article