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Shares slid after the company reported mixed first-quarter results and issued tepid guidance. Here's what investors need to know.
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After the release of its first earnings report since going public in April, shares of Pinterest (PINS +0.01%), a visual search engine and social media platform, dropped as much as 17% in early-morning trading on Friday. Shares were down about 10% as of 9:53 a.m. EST.
Pinterest's stock has been red hot since its public debut, so the pressure was on for the company to deliver strong results. Unfortunately, its first-quarter results can best be described as mixed:
Image source: Getty Images.
Turning to guidance, here's what the company expects in 2019:
Traders are selling off shares in response to the worse-than-expected net loss and modest guidance.
Check out Pinterest's latest earnings transcript.
Pinterest's stock was trading for more than 21 times trailing sales prior to this earnings report. That nose-bleed valuation likely ramped up the expectation so high that anything short of blowout quarterly results and strong guidance was bound to cause the share price to take a hit.
The good news for bulls is that revenue, APRU, and MAUs are all trending in the right direction. Management is also investing heavily now in an effort to launch new tools that advertisers can use to make the company's platform more attractive.
Overall, my view is that the long-term thesis for owning Pinterest's stock is still intact, but this report clearly shows that the company's C-suite has some work to do with regards to managing Wall Street's expectations.