What the Covid-19 pandemic gave
‘s growth, it can also take away.
Shares of Pinterest (ticker: PINS) plunge more than 18% to $58.79 in Friday trading after the image-sharing platform revealed on Thursday that easing lockdown restrictions is hurting user growth. Wall Street analysts showed little mercy.
According to a Barron’s counting, at least half of the 28 analysts covering Pinterest have cut target prices and lowered several Pinterest stocks. The average target price is now $59.46. Before the win, it was almost $80.
Late Thursday, Pinterest said its monthly active users, or MAU, dropped 5%, or about 20 million users, in the second quarter, compared to the first. It further reported declines in U.S. MAUs, from July to Tuesday, reporting a 7% drop, although the number of users grew 5% globally.
To his credit, CEO Ben Silbermann addressed the issue directly during the conference call on Thursday. The boss told investors that the company had seen a big boost to its user base because people were trapped inside. With pandemic restrictions easing in some parts of the world, that trend has somewhat reversed.
“As the world opens up, we’re seeing the same effect in the opposite direction,” he said.
Evercore ISI analyst Mark Mahaney downgraded the stock to an In Line rating from Outperform, lowering his price target from $98 to $60.
In the research note, Mahaney contrasted Pinterest’s reopening performance:
(TWTR). When the lockdown orders went into effect last year, Pinterest provided the biggest relative boost to users among the major social media companies, and Twitter got the second largest increase in users.
But Pinterest lost seven million US users as of the first quarter, compared to Twitter’s loss of one million US users. Twitter also grew its user base in the US by 11% compared to the year-ago quarter, Mahaney wrote.
Mahaney noted that changes to Google Search were negatively impacting Pinterest’s user trends, and said the company pointed out that the more lucrative mobile users in the US and globally grew modestly by 20% compared to a year ago. Mobile users make up a “significant majority” of Pinterest’s revenue, Mahaney said.
JP Morgan analyst Doug Anmuth also lowered his price target and downgraded the stock to Neutral from Overweight. Anmuth’s new target of $68 – previously $95 – reflects a multiple of 10.5 times its estimated 2023 revenue of $4.3 billion. Anmuth said in the note that its second quarter results have raised concerns about future MAU growth following the company’s pandemic-related earnings.
Anmuth is also concerned about the company’s plans to move Pinterest’s flagship product from its existing “browse and save ideas” model to a destination where users can interact with creators. “Idea Pins” is active in 22 markets as of the second quarter and has gained some positive early traction, Anmuth wrote.
But his team is concerned that the company could experience hiccups in the near term if users switch to watching richer streaming and video content. The new types of media may not work in all categories, Anmuth wrote.
Pinterest stock has had a tough year so far, dropping 11% as the
S&P 500 Index
Write to Max A. Cherney at firstname.lastname@example.org