Pinterest, Inc.

Pinterest gave disappointing financial results this quarter, missing out on revenues and earnings largely due to the weak advertising market. While its overall revenues grew despite the macro conditions, the company viewed resilience from its large advertising partners. Also, the monthly active users of the company declined year over year because of an increase in competition, algorithm changes on Google, and lower search traffic. In Canada and the U.S., the mobile app users of Pinterest were sequentially flat. The digital advertising environment continues to be challenging. Strength has been viewed from international and retail advertisers, and from CPG, a softer demand is seen in the quarter. In the quarter, the company caught up with a few creator-related marketing that was planned originally. Also, Pinterest saw an opportunity to augment its R&D team with the recruiting market becoming more favorable and an improvement in recruiting execution. G&A expenses of the company sequentially increased with the headcount growth as well as related payroll spending in its recruiting team and human resources. We provide the stock of Pinterest with a ‘Hold’ rating with a revision in the target price.