Pinterest's (PINS +1.29%) user base peaked in the first quarter of 2021 at about 478 million, and has declined significantly since then. However, in this Fool Live video clip, recorded on Jan. 10, Fool.com contributor Matt Frankel explains that while this is certainly worth keeping an eye on, there's a good explanation and investors shouldn't panic, even though Pinterest has lost nearly two-thirds of its value from its 2021 peak.
Matt Frankel: It just went straight up at one point in early 2021. Unlike Lemonade (LMND +0.22%), Pinterest was at about $90 a share. Not because of some meme-stock rally, just because the business really looked like it justified it. Since then, it's crashed down by about two-thirds, partially because of just the general sell-off in high-growth tech stocks, but also partially for a good reason.
Here you go. This is Pinterest's monthly active users, and don't be fooled by the numbers on the right. Look at this as on a quarter-by-quarter basis. Their user base peaked in the first quarter of 2021: 478 million total users, 380 million of those really were international, and 98 million of those were in the U.S. Fast-forward to the third quarter of 2021 and the overall user base declined to 444 billion. Almost about a 10% decline in the U.S. user base, which really freaked investors out because that's where most of their money comes from, as you'll see in one of these later slides.
That's what's scaring investors. To be fair, like I said, this is a good reason for investors to do a little more digging. Because a social media platform that had been growing at, you can see on the top bar there, 37% year over year, it's all of a sudden losing users. That could set off a bell in your head. The reason is for the past few years, we've been in one state of lockdown or another here. In terms of what we can go out and do socially.
In the beginning of the pandemic, a lot of people flocked to Pinterest because they literally couldn't leave their houses. A lot of people had nothing but time to do renovation projects around their house, which Pinterest is known for getting renovation ideas. When my wife wanted a dining room table, she went to Pinterest and looked for ideas. People had nothing but time to do that. Now that people can go about their lives a little bit more than they could a year ago, that has caused a user base to contract a little bit.
