Pinterest $PINS ( ▼ 16.83% ) shares plunged in premarket trading after the company issued a disappointing first-quarter sales forecast, overshadowing an otherwise steady fourth-quarter report. While Q4 revenue rose 14% year over year to $1.32 billion, roughly in line with expectations, earnings per share of $0.67 came in slightly below forecasts.
The real concern was guidance: Pinterest expects Q1 revenue between $951 million and $971 million, missing analyst estimates of about $980 million. That softer outlook sent the stock tumbling nearly 20% as investors recalibrated growth expectations.
Retailers hit pause on ad budgets
Management pointed to a key culprit behind the slowdown: retailers cutting advertising spending amid tariff pressures and economic uncertainty. With many brands tightening budgets, ad dollars are increasingly flowing toward platforms with the largest audiences, particularly TikTok and Instagram.
For a company that relies heavily on retail advertisers, even a modest pullback can have an outsized impact on revenue growth.
Fighting back with AI and restructuring
Facing intensifying competition, Pinterest has been reshaping its strategy around artificial intelligence. The company recently cut about 15% of its workforce to redirect resources toward AI-driven features and discovery tools aimed at boosting engagement and ad performance.
CEO Bill Ready also emphasized that Pinterest remains a major search destination, claiming the platform still handles more searches than ChatGPT. The bet is that smarter recommendations and shopping tools will eventually attract advertisers back.
For now, though, investors appear focused on the near-term reality: slowing ad demand, tougher competition, and uncertainty about when growth will reaccelerate.