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What Happened in the Stock Market Today

By Jim Crumly – May 17, 2019 at 5:12PM

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Pinterest fell after it reported results for the first time since its IPO and Chinese coffee chain Luckin Coffee went public.

Stocks seesawed Friday on a mix of positive and negative news on trade, with most major benchmarks ultimately finishing lower. The Dow Jones Industrial Average (^DJI 0.55%) and the S&P 500 (^GSPC 0.75%) both lost less than 1%.

Today's stock market

Index Percentage Change Point Change
Dow (0.38%) (98.68)
S&P 500 (0.58%) (16.79)

Data source: Yahoo! Finance.

As for individual stocks, Pinterest (PINS -0.27%) reported quarterly results and Luckin Coffee (LKNC.Y 7.29%) had its initial public offering (IPO).

Rising graph on chalkboard erased to show a fall.

Image source: Getty Images.

Pinterest sees strong growth

Social media company Pinterest reported quarterly results for the first time since going public last month, and although Q1 numbers compared well to the guidance the company provided a month ago, shares tumbled 13.5%. Revenue increased 54% to $201.9 million, hitting the top end of the guidance range of $198.9 million-$201.9 million. Adjusted EBITDA loss of $38.4 million was better than the loss of $43.5 million-$41 million the company had said to expect.

Pinterest added 26 million monthly active users (MAUs) in the quarter for a total of 291 million, up 22% year over year, and average revenue per user increased 26% over last year to $0.73. The company's operating loss was 22.2% of revenue compared with 41.9% in Q1 last year.

Analysts had expected the company to lose $0.11 per share compared with the actual loss of $0.33, but the problem was with the estimate, not the result. Pinterest had not provided EPS guidance because it was unsure of its provision for income tax, which clearly was true of analysts as well. The drop in the stock may seem drastic, but it still ended the day up 40% from the IPO price.

Investors thirst for Starbucks rival in China

Chinese coffee chain Luckin Coffee went public today, and American depositary shares soared 19.9% above the offering price of $17.00 to close at $20.38. The company raised $561 million in the IPO and is now valued at $4.8 billion.

Luckin has grown rapidly, expanding from a single store in Beijing 18 months ago to 2,370 stores in 28 cities, making it second only to Starbucks in a bid to capitalize on a growing taste for premium coffee in China. The company intends to be the largest coffee chain in the country by the end of the year. Luckin's strategy is to focus on mobile ordering and small-format pickup stores, which are typically located in office buildings, commercial areas, and university campuses.

In the most recent quarter, Luckin had a net loss of $82.2 million on revenue of $71.3 million. Despite the paltry numbers, investors were buying into the company's ambitions for extremely rapid expansion today.

Jim Crumly owns shares of SBUX and has the following options: long January 2020 $50 calls on SBUX. The Motley Fool owns shares of and recommends SBUX. The Motley Fool has a disclosure policy.

Stocks Mentioned

Pinterest Stock Quote
Pinterest
PINS
$22.62 (-0.27%) $0.06
Luckin Coffee Stock Quote
Luckin Coffee
LKNC.Y
$24.65 (7.29%) $1.68
Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$33,781.48 (0.55%) $183.56
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
^GSPC
$3,963.51 (0.75%) $29.59

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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