According to Wednesday’s earnings report, Pinterest Inc. continued to experience a surge in new users during the COVID-19 pandemic, resulting in more-than-expected profit and revenue growth this summer, and the stock once again climbed to a new record high.
The company announced a loss of $94.2 million in the third fiscal quarter, or a loss of 16 cents per share, and revenue of $442.6 million, higher than the $280 million in the same period last year. After adjusting for stock-based compensation and other factors, the company reported earnings per share of 13 cents, higher than the adjusted earnings per share of 1 cent a year ago. Average analyst expectations: adjusted earnings per share of 4 cents, sales of 383 million US dollars.
After the report was released, Pinterest’s stock price rose more than 20% in after-hours trading, and closed down 7.1% to $48.78. During the extended trading session, the stock price exceeded $60. The trading price of Pinterest stock in regular trading has never exceeded $53.87.
Since the social media company’s last earnings report, Pinterest’s stock price has more than doubled and hit a record high. The company predicts that revenue and user growth will be much higher than previously expected. Despite being hit by the pandemic, the online advertising market seems to have found a strong force, because last week Snap Inc. SNAP announced strong third-quarter financial results.
The stocks of online companies supported by advertising have been increased across the board.
After the release of Pinterest’s report, online advertising stocks also experienced a leap. The report came 24 hours earlier than the quarterly report of online advertising giant Facebook Inc. FB.
And Twitter Inc. TWTR,
In the extended period on Wednesday, Twitter’s stock rose by more than 5%, while Facebook’s stock rose by more than 2%, and Google’s parent company Alphabet rose by about 1%.
The sharp rise in Pinterest’s stock was attributed to an unexpected surge in users on the company’s service, which is similar to an online scrapbook. In late July, Pinterest reported that monthly active users increased to 416 million from 367 million in the previous quarter. Analysts had expected Pinterest to add about 12 million new users this quarter.
In Wednesday’s report, Pinterest showed that the number of monthly active users was 442 million, an increase of 26 million from the previous quarter. On average, analysts expect Pinterest to report more than 436 million users, which is due to the increase in the previous quarter leading to higher expectations.
In a letter to shareholders, Pinterest executives gave new users some tips. They said that the growth of users under the age of 25 is particularly strong; when the asylum-in-place order comes into effect, the usage rate tends to rise, and when the temporary asylum order does not take effect, the usage rate tends to decrease; and users are looking for specific items Ideas, such as building a home office.
CEO Ben Silbermann and CFO Todd Morgenfeld wrote: “This means that they are searching for more objects than their older peers. This is a new user trend that predates the COVID, but has accelerated since March.” More searches on the platform will increase the threshold for providing relevant results (especially more relevant ads), but search engagement also tends to have higher commercial intent, which represents a huge opportunity for future growth, especially as Advertisers are increasingly seeking to provide sales and conversions.”
Advertisers are also looking for a website called Facebook. In a conference call on Wednesday afternoon, Morgenfeld admitted that advertisers’ boycott of Facebook in the third quarter was a “trailing wind” for Pinterest’s business, but he also said that this situation may not last.
“On the one hand, this group of advertisers accelerated their spending on Pinterest in the third quarter. On the other hand, the attractiveness of a positive, brand-safe consumer platform may weaken after the end of the US general election cycle in November. So some of these spending may also weaken.” “It is clear that for many reasons, we believe that Pinterest’s enthusiasm is a long-term competitive advantage, but it is difficult to predict the behavior of advertisers in the near future, especially during the election season.”
However, not all growth is due to the pandemic or Facebook’s resistance. Pinterest executives said that after Apple Inc. AAPL, about 4 million new users arrived on their website in search of ideas for customizing the iPhone’s home screen.
In the update of Apple’s mobile operating system, the function of personalizing its background filter is provided. Mogenfeld said that Pinterest did not expect that 4 million users would stay.
Pinterest executives said they expect revenue in the fourth quarter to grow by about 60% year-on-year, roughly in line with the 58% growth in the third quarter. Pinterest reported revenue of $400 million during the holiday last year, so the guidance indicates that this year’s sales are about $640 million, again exceeding expectations. According to FactSet data, analysts on average expect fourth-quarter revenue to be $541 million.
With the launch of the S&P 500 SPX, Pinterest’s stock price has risen by 165% so far this year and has risen by more than 106% in the past three months.
During that period, the index rose by 5% and 5.4%, respectively.