What happened
The stock market was having a weak day on Thursday, with all three major market indexes firmly in the red shortly after the opening bell. However, social media stock Pinterest (PINS +0.00%) was a major underperformer, with shares down by 8% at 10 a.m. ET after falling by more than 10% earlier in the trading session.
So what
There isn't any company-specific news behind today's drop. Rather, social media stocks are trading sharply lower after Meta Platforms (FB +1.81%) -- Facebook's parent company -- reported disappointing fourth-quarter results Wednesday afternoon.
Image source: Getty Images.
Specifically, Meta missed on earnings expectations and issued a weaker-than-expected forecast for revenue growth in the first quarter. The company cited Apple's privacy changes as weighing on ad revenue and said that it expects inflation and supply chain disruptions to negatively affect the budgets of its advertisers. Not only that, but Facebook's active user base declined for the first time ever.
Now, this doesn't necessarily mean Pinterest is experiencing the same issues, but it isn't a great sign. Pinterest also generates virtually all of its revenue from advertisers, so it's not a surprise that investors seem concerned.
Now what
As mentioned, Pinterest is set to report its earnings after the closing bell, so we'll get a better look at how Pinterest's business is performing then. Two key items to watch will be user growth and monetization. If Pinterest's user base starts growing again, or if it shows significant progress with monetization of its user base (particularly the 80% of its users that reside outside the United States), today's dip could end up being a bargain.
