(Reuters) – Pinterest Inc beat Wall Street estimates for second-quarter revenue growth on Thursday as the photo-sharing platform grapples with ad spending cuts, sending its Bell shares trading 13% lower after sending the stock down.
While Pinterest said the ad market is stabilizing, it cautioned that the market remains uncertain. Shares of Snap Inc ( SNAP.N ) fell nearly 18% in after-market trading after weak first-quarter earnings, and the company warned it could miss second-quarter estimates as well.
Smaller digital ad sellers such as Pinterest and Snap are losing ground to larger tech rivals Alphabet ( GOOGL.O ) and Meta Platforms ( META.O ) in a weak economy as advertisers stick to proven platforms. This follows strong sales during the pandemic, when advertisers spent heavily to reach customers online.
In an effort to boost its advertising business, Pinterest has also announced that it is opening up third-party advertising on demand, which will allow other parties to advertise on its platform. Amazon ( AMZN.O ) Announched is the first partner as it looks to bring more brands and products to its platform.
“We believe newly appointed CEO Bill Ready is looking for ways to better leverage his platform on the e-commerce side,” said Angelo Zeno, chief equity analyst at CFRA Research, which focuses on growing the platform’s user base creating a shopping experience
Ready’s CEO said the company is using next-generation artificial intelligence to deliver better recommendations and ads on the platform, among other things.
Global monthly active users (MAUs) on the photo-sharing platform, which allows users to create pinboards online, rose 7% to 463 million from an estimated 454.03 million, Refintiv data showed.
The company’s revenue rose 5% to $602.58 million in the first quarter ended March 31. Analysts on average were expecting $592.99 million, according to Refinitiv.
Pinterest said it expects revenue growth in the current quarter to be in line with revenue growth in the first and fourth quarters of 2022. Revenues rose 4% in the fourth quarter. Wall Street had forecast a 6.15% gain, according to Refinitiv.
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