Pinterest (PINS +0.53%) is scheduled to report fourth-quarter 2021 earnings on Feb. 2. The company thrived at the pandemic's onset when billions of folks worldwide spent tremendous amounts of time at home. That gave rise to a demand for in-home entertainment, and Pinterest benefited from the tailwind.
However, now that economies are reopening, Pinterest struggles to retain consumer attention. Folks have more choices for spending their time, and one of the activities some are giving up is browsing Pinterest. Investors will be looking at Pinterest's monthly active user trends to determine if trending losses have changed direction or not.
Despite shedding 34 million monthly active users, Pinterest still boasts 444 million MAU. Image source: Getty Images.
Pinterest is trying to stem the tide of user losses in Q4
Unfortunately for shareholders, Pinterest has shed monthly active users (MAU) for two consecutive quarters. After peaking at 478 million MAU in the first-quarter of 2021, Pinterest has lost 34 million. Still, the company boasts 444 million MAU as of Sept. 30.
Pinterest reports MAU totals in two segments -- international and the U.S. -- with the bulk (356 million) outside of the U.S. Similarly, the losses over the past two quarters have come chiefly from the international segment -- 24 million vs. nine million in the U.S. That said, losses from the U.S. have a more harmful effect on the business. That's because the average revenue per user (ARPU) is 14.6 times higher in the U.S. vs. internationally.
The company is still in the beginning stages of monetizing its international user base. Meanwhile, it is further along in that process in the U.S. Note that the company's app is free to join and use. Pinterest makes money by showing advertisements to users. Marketers are keener on getting the attention of users from the U.S. than from almost any other region. That's because folks in the U.S. typically have more purchasing power.
It will be interesting to observe how advertisers shifted spending in the most recent quarter. The rise of the omicron variant caused further disruptions in the worldwide supply chain. Businesses from various sectors are reporting shortages of inventory to meet customer demand. In that scenario, spending money on advertising may not be needed. The last thing businesses want is to ask customers to come to their stores to find empty shelves. Not only do they not make a sale, but they disappoint the consumer as well.
What this could mean for Pinterest investors
Analysts on Wall Street expect Pinterest to report revenue of $827.4 million and earnings per share (EPS) of $0.46. If it meets those projections, that would be an increase of about 17% and 7%, respectively, from the year-ago period.
Declining MAU trends have led Pinterest's stock to get hammered. The stock is down more than 65% from its high and is now trading at a forward price-to-earnings ratio of about 21. If the company can report positive MAU trends coupled with management's confidence that losses from economic reopening are over, it could boost the depressed stock price.
