Pinterest (PINS 6.53%) shares were annihilated after the company reported largely in-line results and issued cautious guidance. The stock is now trading down more than 40% on the year, as of this writing.
Let's dig into Pinterest's fourth-quarter results and prospects to see if this dip is a buying opportunity.
Image source: Getting Images.
Tariff woes hit Pinterest clients
The social media company blamed its slower growth on the impact that tariffs were having on large retailers, who have reduced ad spending. Pinterest has long tended to be more exposed to this segment of the advertising market, while Alphabet and Meta Platforms, by contrast, are much more tied to smaller merchants. Given its platform, Pinterest is also pretty largely exposed to the home furnishings industry, which has been struggling with both tariffs and the after-effects of a pull-through in demand during the COVID-19 pandemic.
For Q4, Pinterest's revenue climbed 14% year over year to $1.32 billion, which was essentially in line with the $1.33 billion consensus estimates, as compiled by LSEG. U.S. and Canadian revenue rose by 9% to $979 million, while European revenue soared 25% to $245 million, and the "rest of world" segment revenue jumped 64% to $96 million.
NYSE: PINS
Key Data Points
Pinterest's monthly active users (MAUs) grew by 12% to 619 million, led by a 16% jump in "rest of world" users to 356 million and an 9% increase in European users to 158 million. U.S. and Canadian MAUs, meanwhile, grew by 4% to 105 million.
Pinterest's global average revenue per user (ARPU) edged up by 2% year over year to $2.16; however, this number is impacted by regional mix. European ARPU climbed by 15% to $1.59, while "rest of world" ARPU soared 42% to $0.27. U.S. and Canadian ARPU, meanwhile, increased by 4% to $9.41.
Turning to profitability, Pinterest saw its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) increase by 15% year over year to $541.5 million. Adjusted earnings per share (EPS) climbed by 30% to $0.67, which was just shy of the $0.69 consensus.
Looking ahead, Pinterest projected its Q1 revenue to be between $951 million and $971 million, representing 11% to 14% growth year over year. However, currency impacts will be a 3% tailwind, so organic growth will be slower. It's looking for adjusted EBITDA of between $166 million and $186 million.
Should investors buy the dip on Pinterest stock?
While Pinterest has been dealing with headwinds, the company has still been growing nicely. It also hasn't been sitting still and has really worked to enhance its user experience and improve its ad platform through artificial intelligence (AI). Meanwhile, both its user counts and ARPU are on the upswing.
With the sell-off, the stock has become incredibly cheap, trading at a forward price-to-earnings ratio (P/E) of about 8 times based on 2026 analyst estimates, while still growing its revenue and earnings at a double-digit clip. The drop in the stock looks way overdone, and I'd be a buyer of this price dip.
