Business

I can’t see Pinterest and I’m crazy

Consumers are no longer tied to their computers. They explore the great outdoors, fly again, eat out, and enjoy friends and family. For Pinterest,

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They are looking for inspiration in all the wrong places.

Snap following banner results from social media peers,

Over the past two weeks, Inc., Twitter, and Facebook image-sharing companies reported tremendous revenue growth of 125% year-on-year in the second quarter on Thursday. But Pinterest also said that the easing of the blockage has led to fewer people using the platform than expected. Global monthly active user growth was more than 6 percentage points slower than Wall Street expected, and US monthly active user growth was actually down 5 percent year-over-year.

Engagement headwinds have continued since the end of the quarter, according to Pinterest, with monthly active users in the US declining at a faster pace than analysts modeled in the quarter. Immediately after the report, the stock price fell by more than 18%.

Pinterest is losing viewers, especially at bad times. Pandemics are accelerating the online shift of retailers, and as the economy recovers, advertisers seem particularly willing to pay to attract new customers. Pinterest has also been enthusiastic about its own monetization efforts, integrating with Shopify.,

We plan to start trading on the platform by the end of the year.

From a monetization point of view, Pinterest is doing a lot right. As more businesses move online, retailers will find it easier than ever to track advertising revenue. With that in mind, Pinterest seems to be particularly good at showing what advertisers are returning. Morgan Stanley estimates that 67% of the US advertising business is performance marketing, that is, advertising focused on immediate traffic and sales promotion rather than long-term brand advertising. According to the company, the quote is the highest of all major social media players.

Overall, Pinterest’s results during the quarter show that investments to drive monetization are paying off. Domestically, average revenue per user increased 103% this quarter. That’s more than double the growth shown in the first quarter, well above Wall Street’s expectations. Despite that improvement, Pinterest is generating far less money from its users than its direct competitors. Although not a complete comparison, Snap’s results show that per user revenue in North America is more than $ 2 more than Pinterest’s $ 5.08 quarterly at Pinterest.

For long-term investors, such numbers show that Pinterest has many runways. For reference, Facebook reported that average US and Canadian user revenue exceeded $ 53 in the second quarter. However, in a highly competitive advertising environment, Pinterest needs to prove that it can continue to grow. In particular, the average company revenue per user remains relatively low.

Pinterest inventory has increased by 190% over the past year, but has declined since its peak in February. So far this year. The company’s share price has risen by less than 10%, indicating that the post-revenue plunge in the first quarter has begun to slow user growth. Thursday’s report provides confirmation.

Returning to reality is great for US consumers. For Pinterest, it’s not that many.

Write to Laura Forman (laura.forman@wsj.com)

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I can’t see Pinterest and I’m crazy

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