Pinterest slides 69% in a year as growth concerns reset valuation

Pinterest reported Q1 revenue of $1.01 billion, up 15% from a year earlier and beating analysts' estimates by 4.4%, as the image-sharing platform stabilized growth after a year of investor disappointment.

"The results validate management's strategic playbook — broadening the revenue base beyond the largest retailers and deepening Performance+ adoption is starting to translate into tangible results," Evercore analyst Mark Mahaney said.

The company posted 631 million monthly active users, a gain of 10.7% year over year, while average revenue per user also improved as advertisers shifted more spending to the platform. Pinterest has beaten consensus revenue estimates in seven of the past nine quarters, with the two misses each less than 1%, according to FactSet.

The stock has lost 69% of its value since Barron's recommended it a year ago, as growth consistently fell short of expectations. At roughly $20.58, Pinterest trades at 7.5 times enterprise value to forward EBITDA — nearly half the S&P 500's multiple and below the 10-plus times assigned to internet peers Etsy and eBay. Analysts project operating margins will expand to just over 32% by 2029, still well below Meta Platforms' 43%.

Revenue growth stabilizes after uneven year

The first-quarter results marked an improvement from the 13% organic growth rate Pinterest posted in early 2024. Management has navigated a series of headwinds over the past year, including soft spending from food advertisers and weaker Canada revenue tied to tariff uncertainty. The company's ad technology upgrades and click-through features have helped attract new users globally and monetize them more effectively.

Elliott Management, the activist hedge fund led by billionaire Paul Singer, invested $1 billion in Pinterest in March 2023 and has a track record of backing beaten-down stocks that later rebounded, including Southwest Airlines and Dexcom.

What's at stake for Pinterest holders

The stabilization in revenue growth suggests the worst of the deceleration may be behind the company. The stock has rallied from the low $20s to $44 once before, in 2024, and the current valuation leaves room for a similar recovery if growth holds. Investors will watch the next quarterly report for evidence that the ad-tech improvements can sustain mid-teens revenue expansion and push margins higher.

This article is for informational purposes only and does not constitute investment advice.