(Bloomberg) -- Pinterest Inc. tumbled in late trading after forecasting weak sales for the holiday quarter, a sign the search and discovery network is struggling to keep pace with larger peers such as Meta Platforms Inc. and Snap Inc.
Fourth-quarter sales will be $1.13 billion to $1.15 billion, Pinterest said in a statement Thursday. The midpoint of that range is lower than the average projection from Wall Street analysts, according to data compiled by Bloomberg.
On a conference call following the earnings release, Pinterest said it continued to see weaker demand from food and beverage advertisers, curbing revenue in the holiday period. The shares fell as much as 14% in extended trading, and had declined more than 8% for the year before the report.
Pinterest has made “shoppable” content a key focus in hopes consumers will buy items they see as they browse through the site. In August, the company inked a partnership with Amazon.com Inc. that lets Pinterest users shop directly from the e-commerce company to buy items such as beauty products, clothing or home decor.
Pinterest also works with both Amazon and Alphabet Inc.’s Google to fill advertising slots and offer more direct-response ads, which push people to click on promotions or purchase items rather than just raising brand awareness.
For the third quarter, revenue rose 18% to $898.3 million, Pinterest said. That was just above the $896.7 million that Wall Street analysts projected on average.
The pinboard-style site has benefited from its popularity with Generation Z, young people generally born after 1997, who are especially fond of shopping online. Pinterest averaged 537 million monthly users in the third quarter, up 11% from a year ago and beating forecasts.
The San Francisco-based company is still significantly smaller than peers Meta Platforms Inc. and Snap Inc., which compete with it for ad dollars. This quarter, both rivals outperformed analysts’ predictions for sales and user growth, largely thanks to investments in artificial intelligence.
Pinterest has also been spending on AI to better target ads and recommended photos and images to its users. Total expenses were $904 million for the quarter, above analyst estimates of $875.1 million.
The company also announced board approval for a $2 billion share buyback program, canceling its previous plan, which was authorized in September 2023. The prior plan authorized $1 billion in share repurchases, half of which had been used, Pinterest said.
(Updates with ad comments in third paragraph, share repurchase in 11th.)
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