Feb 13 (GeokHub) — Shares of Pinterest sank 21% on Friday, marking their steepest drop in months and pushing the stock to levels not seen since the 2020 pandemic downturn.
The sharp sell-off followed a weaker-than-expected revenue forecast, reflecting reduced advertising spending from major U.S. retailers facing tariff-related uncertainty and broader economic pressures.
Ad Spending Pullback Hits Revenue Outlook
Pinterest projected quarterly revenue below market expectations, citing softer marketing budgets from large retail clients. Trade-related cost pressures have reportedly led several major advertisers to reassess digital ad allocations.
If losses hold, the company is set to erase more than $2 billion in market value, bringing its total valuation closer to $10 billion from about $12.5 billion prior to the decline.
AI Disruption Adds Competitive Pressure
Beyond macroeconomic challenges, Pinterest is navigating intensifying competition in the AI-driven advertising space.
OpenAI is testing advertising features within ChatGPT, while Google has expanded AI-powered shopping integrations across search and its Gemini chatbot.
Established advertising giants like Meta and TikTok continue to capture significant brand budgets, leaving smaller social platforms fighting for market share.
Pinterest’s latest results also contrasted with stronger recent performances from Snap and Reddit, further amplifying investor concerns.
Strategic Reset and Layoffs
The company recently reduced its workforce by less than 15% as part of a restructuring effort aimed at accelerating its AI transformation strategy. However, investors appeared unconvinced that the changes would offset mounting competitive pressures.
Market analysts note that while Pinterest maintains differentiation through visual discovery and shopping-focused ad formats, legacy monetization models may limit flexibility in an increasingly AI-driven advertising landscape.
At least two dozen brokerages reportedly lowered their price targets on the stock following the earnings outlook.
Valuation Snapshot
Pinterest currently trades at roughly 9.5 times forward earnings estimates — comparable to Snap but significantly lower than Reddit and Meta, which command premium multiples due to stronger advertising momentum and AI integration.
The company now faces a critical juncture: proving it can convert its AI investments into sustainable revenue growth while defending its niche in visual commerce and digital discovery.
