Pinterest reported second-quarter results Monday that missed on earnings but beat on revenue in a tough market. The Pinterest earnings report came after the market close, as the stock jumped.
The social media company reported adjusted earnings of 11 cents per share on revenue of $666 million. Analysts expected Pinterest to report earnings of 18 cents on revenue of $665 million, according to FactSet.
As Pinterest reported earnings, activist investor Elliott Investment Management proclaimed itself the company's largest shareholder.
"Pinterest is a highly strategic business with significant potential for growth, and our conviction in the value-creation opportunity at Pinterest today has led us to become the Company's largest investor," Elliott said in the announcement. "As the market-leading platform at the intersection of social media, search and commerce, Pinterest occupies a unique position in the advertising and shopping ecosystems."
Pinterest stock soared 20%, near 24.30, during after-hours trading on the stock market today.
The Pinterest earnings report comes at a time with the company and its peers are struggling through a slowdown in advertising spending, its primary source of revenue.
Pinterest Stock: Reasons For Ad Slowdown
Reasons for the ad slowdown include increased competition and a weak economic environment.
Advertisers in a wide variety of industry groups have reported concerns related to the macro operating environment. Those worries include continued supply-chain disruptions, rising input costs, inflation, economic concerns due to rising interest rates, and concerns related to geopolitical risks stemming from the war in Ukraine.
Another big problem is that Apple changed the advertising tracking on its operating system. Consumers got more privacy, but advertisers lost out on valuable user-tracking data. The change has cost social media stocks billions in lost revenue. How long the impact of these issues will remain is unclear.
"What we're hearing from advertisers I think more specifically as it pertains to advertising budgets is what we said before, which is that they are taking this time, given all of those other macro pressures, to re-evaluate their priorities to ensure that they're making the right investments in the right places," RBC Capital Markets analyst Brad Erickson said in a note to clients.
"We accelerated our investment in shopping and ecommerce this quarter, and I am thrilled by the dedication of our leaders and employees to continue to build a positive place on the Internet," said Chief Executive Bill Ready, in written remarks with the Pinterest earnings report.
Since hitting a record high of 89.90 on Feb. 19, Pinterest stock is down about 78%.
Please follow Brian Deagon on Twitter at @IBD_BDeagon for more on tech stocks, analysis and financial markets.
