What happened 

Shares of Pinterest (NYSE:PINS) plunged 18% on Friday after the social media platform reported disappointing second-quarter results. 

So what 

Pinterest's revenue soared 125% year over year to $613.2 million. Its net income, meanwhile, improved to $69.4 million from a loss of $100.7 million in the year-ago period. The gains were fueled by strong increases in average revenue per user (ARPU), as advertisers ramped up their spending on Pinterest's platform during the pandemic.

A downwardly sloping stock chart.

Pinterest's stock price fell sharply on Friday. Image source: Getty Images.

But while Pinterest reported a 9% rise in global monthly active users to 454 million, it saw its MAUs in the U.S. fall 5%, to 91 million. That sparked fears among investors that the social media star may have reached the point of saturation in its most important market.

Now what

With millions of people stuck at home, new users flocked to Pinterest during the early stages of the COVID-19 crisis. But as the economy reopens and people spend more time outdoors and offline, the image-sharing site's growth is slowing. Management expects Pinterest's revenue growth to decelerate to "the low-40% range" in the third quarter.

The company's declining user metrics in the U.S. are even more concerning. If Pinterest has reached a ceiling on new users in its most profitable market, investors may need to rein in their long-term earnings expectations.

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