Social media platform Pinterest (PINS:NYSE) lost nearly 10% of its value in after-hours trading overnight as it became the latest in a run of internet stocks that bank on online advertising to spook the market.

Pinterest, a sort of visual discovery engine for finding ideas like recipes, home and style inspiration, and more, missed fourth quarter (to 31 Dec) revenue expectations and issued soft guidance for the March quarter.

PINTEREST Q4 RESULTS

While the company posted earnings per share of $0.53, beating the consensus estimate of $0.51, its revenue of $981.3 million fell nearly $10 million shy of consensus pitched at $990 million. Adding to the market’s worries was soft Q1 guidance. Pinterest anticipates Q1 revenue to come in somewhere between $690 million and $705 million, hinting that hitting analyst consensus of $702 million will be tough.

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At least user numbers are going the right way, with monthly active users in Q4 up 11% to 498 million, topping analyst estimates of 487 million. Yet even this silver lining came with the cloud that global average revenue per user was weak, at $2 versus analyst estimates of $2.05.

INVESTORS TROUBLED

The main concern for investors is that in a broad recovery in the online advertising market, some are winning while others are not, and Pinterest may be in the wrong camp.

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For example, Meta Platforms (META:NASDAQ), Alphabet (GOOG:NASDAQ) and Amazon (AMZN:NASDAQ) all saw their ad units grow by double digits in Q4 2023.

By contrast, Snap (SNAP:NYSE) shares cratered 35% on Wednesday (7 Feb) after the company reported Q4 sales growth of 5%, trailing expectations, and the company also issued weak guidance.

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