Pinterest’s Earnings Stumble on Trade Tensions, Stock Down More than 20%

Pinterest, Inc. (NYSE: PINS), started as a place for people to collect and share images online. Think of it like a digital scrapbook where users pin ideas for home decor, recipes, or fashion. Over time, it grew into a key advertising platform, especially for retailers who use it to reach shoppers browsing for inspiration. Companies pay to promote their products on users’ feeds, turning casual scrolling into sales opportunities. But lately, that business took a hit from unexpected trade pressures.

Pinterest’s stock dropped more than 22% at the market open today. This came after the company shared its fourth-quarter earnings for 2025, which fell short of what investors expected. Revenue reached $1.32 billion, up 14% from the year before, and monthly active users hit a record 619 million, up 12%. Those numbers sound solid on paper. Yet the guidance for the next quarter disappointed, and the stock reaction showed real worry among shareholders. 

The main culprit, according to CEO Bill Ready, lies in tariffs. In this case, new or escalating tariffs under President Trump’s policies have raised costs for many large U.S. retailers. Think Walmart, Target, or Home Depot: they import everything from electronics to clothing and furniture, much of it from China or other Asian countries. When tariffs jump, say from 10% to 60% on certain categories, those costs add up fast. 

Retailers facing these higher expenses make tough choices. They cut corners elsewhere to protect slim profit margins. Advertising budgets often get slashed first because returns there can feel less immediate than, say, negotiating with suppliers. Pinterest relies heavily on these big retailers for ad dollars. Ready noted that Pinterest has a higher share of large retailer clients compared to rivals like Meta or Snap. So when those clients pull back, Pinterest feels it more sharply. In the earnings call, he said, “Our high mix of large retailers relative to some of our peers has resulted in us feeling more of an impact.” 

To understand the tariff effect, consider the supply chain. A tariff on imported apparel might add $5 to the cost of a shirt that sells for $20. Retailers absorb some of that, pass some to consumers, but either way, budgets tighten. Holiday shopping season, which drives Q4 ad spend, amplifies the pain. Pinterest’s visual platform shines for retail inspiration: pins of outfits or kitchen remodels lead straight to “shop now” buttons. But if retailers trim ad campaigns by 10-20% due to tariff squeezes, Pinterest’s revenue growth slows. This quarter, adjusted EBITDA came in at $542 million, missing estimates slightly, and Q1 2026 guidance pointed to $961 million in revenue, below Wall Street’s $982 million target. 

Tariffs do not just hurt Pinterest directly. They create a chain reaction. Retailers slow hiring or promotions, which curbs consumer spending overall. Fewer shoppers mean less need for inspirational ads. Smaller businesses on Pinterest, less exposed to imports, keep advertising steadily. But Pinterest’s client base skews toward giants with global supply chains. This mismatch leaves the platform vulnerable. Over the full year 2025, Pinterest still grew revenue 16% to $4.22 billion and generated $1.25 billion in free cash flow. Strong user engagement, boosted by AI-powered visual search, keeps the core product appealing. Yet trade policies add uncertainty that investors hate.

Pinterest plans changes to broaden its advertiser pool. New leaders in sales and marketing aim to attract more mid-sized firms less tied to imports. Free cash flow conversion neared 99%, giving room for $927 million in stock buybacks. These moves signal confidence. Still, as tariffs persist or expand, retailers will keep watching costs closely. For Pinterest, diversifying clients could buffer future shocks.

Businesses like Pinterest show how global trade touches tech. A policy in Washington ripples to ad platforms in San Francisco. Retailers adapt by shifting suppliers or prices, but short-term cuts hit partners like Pinterest hardest. As users pin more ideas and search smarter with AI, the platform’s appeal endures. The question now centers on whether trade tensions ease or intensify, and how quickly Pinterest adjusts its ad mix.