Skip to main content

Pinterest Stock Leaps As Q4 Earnings Show Ad Sales Offset Active User Declines

Pinterest followed Snap in navigating its way around Apple privacy changes to grow its advertising sales even as its monthly active user base continues to decline.

Updated at 9:56 am EST

Pinterest  (PINS)  shares surged higher Friday after the image-sharing social media group posted better-than-expected fourth quarter earnings and its first-ever annual profit.

Pinterest said daily active users were down 6% from last year's pandemic-driven peak, but a focus on advertising through video helped revenues rise 20% to a Street-beating $846.7 million. Adjusted earnings also topped forecasts at 49 cents per share.

Social media groups have cautioned that Apple's AAPL Identifier for Advertisers (IDFA) privacy changes, which make it more difficult to track and target users with specific ads, have impacted both user growth and top line revenue gains.

"We believe that when we connect Pinners, not just with great ideas but also with the great creators behind them, in rich new formats like short-form video, the overall experience is more inspirational," CEO Ben Silbermann told investors on a conference call late Thursday. "And when people are more inspired, they do more planning and shopping."

"Advertisers are able to reach consumers with more intent and that in turn drives more value for Pinterest," he added.

Pinterest shares were marked 7.7% higher in the opening hour of Friday trading to change hands at $26.38 each, a move that would still leave the stock nursing a six-month decline of around 60%.

In the fall of last year, Pinterest shares were in focus amid reports linking it to a $45 billion takeover from payments group PayPal  (PYPL) , which would have valued it at $70 per share.

PayPal, however, denied the report shortly after, noting in a brief statement that "it is not pursuing an acquisition of Pinterest at this time."

"Overall, we see Pinterest's 4Q21 results and 1Q22 outlook as better than feared, given the recent weakness in shares," said D.A. Davidson analyst Tom Forte, who cut his price target on the group by $12, to $33 per share following last night's earnings. "We remain on the sideline, at this time, as we continue to wait for it to turn the corner on engagement."  

"Apple's privacy changes did not have material impact on Pinterest's sales," he added. "Management believes this is because users have relatively high intent when they use the platform thereby supplying first party, rather than third-party data."