What happened

Shares of Pinterest (PINS 0.11%), the digital image discovery board, were moving higher today on a pair of news items. First, Google-parent Alphabet (GOOG -1.91%) (GOOGL -1.80%) turned in better-than-expected ad revenue in its second quarter, helping to cool off concerns of a collapse in digital advertising after Snap's disappointing report last week. Alphabet was up 6% in afternoon trading.

Separately, multiple news outlets said activist investor Elliott Management has taken a stake in PayPal (PYPL 0.15%) just weeks after it took one in Pinterest, which could be feeding hopes that PayPal could again seek to acquire Pinterest after rumors of a deal circulated a year ago.

On a day when the Nasdaq was up nearly 3%, Pinterest shares had gained 8.7% as of 2:14 p.m. ET.

So what

There was no direct news out on Pinterest today, but those two items were enough to propel the stock up nearly 10%. Alphabet's second-quarter growth wasn't stellar, but it persuaded investors that the ad market was still healthy.

Overall revenue for the search giant increased 13%, or 16% in constant currency, to $69.7 billion, which essentially matched estimates. Google advertising revenue was up 11.6% to $56.3 billion, with a 14% increase in search revenue. YouTube was a weak spot, with revenue up just 5%. 

Nonetheless, ad revenue beat expectations following strong growth in the quarter a year ago. That was enough to give social media stocks like Pinterest and Meta Platforms a boost ahead of their earnings reports.

Separately, PayPal stock jumped 11% on news of Elliott's investment in the company. Elliott is expected to pressure the fintech company to cut costs, though there was no mention of a push to get Paypal to buy Pinterest.

Now what

Today's increase in Pinterest stock looks like mostly noise, as investors will have to wait for the company's earnings report on Aug. 1 to assess its second-quarter performance. While there does seem to be a softening in the ad market, which affects each social media company differently and is partly due to tough comparisons from a year ago, Pinterest offers a different value proposition from both Snap and Google. Investors will also be hearing from new CEO Bill Ready for the first time and will be interested in learning his thoughts about turning the company around after a sharp deceleration in revenue growth.

Analysts expect revenue growth of just 9% to $667 million and see earnings per share falling from $0.25 to $0.18.