Pinterest Inc (NYSE: PINS) shares opened down 20% following the company’s third-quarter 2025 earnings report, signaling investor disappointment despite some solid underlying growth. The sharp drop underscored the tension between Pinterest’s rising user base and the challenges it faces in translating that growth into stronger financial results and outlooks.
Pinterest’s model centers on visual discovery through a platform where users find ideas for lifestyle, shopping, and hobbies, and brands advertise to capture shopper interest. With over 600 million monthly active users worldwide, the company has focused on integrating artificial intelligence and e-commerce features to enhance user engagement and monetize its audience. New tools like augmented reality try-ons and AI-driven personalized boards are part of Pinterest’s attempt to deepen the shopping experience and generate more advertising revenue.
Despite this, Pinterest is navigating an increasingly competitive social media landscape. Giants like Meta and TikTok ramp up their video-driven shopping and advertising capabilities, putting pressure on Pinterest’s appeal to advertisers. This competition, combined with shifting consumer spending patterns and tariffs affecting retailers, has put a strain on the company’s U.S. and Canadian markets where a significant share of ad revenue comes from.
For the third quarter, Pinterest reported revenues of $1.05 billion, marking a 17% increase year-over-year. Monthly active users rose 12% to 600 million, surpassing expectations. Yet, adjusted earnings per share came in at 38 cents, missing analyst forecasts of 42 cents. Additionally, average revenue per user was slightly below estimates. The company’s guidance for the fourth quarter projected revenues between $1.31 billion and $1.34 billion, indicating growth but falling just short of Wall Street’s target.
The stock’s 20% drop reflects market skepticism about whether Pinterest can sustain revenue growth and profitability amid these headwinds. Investors are concerned about moderating advertising spend in U.S. and Canadian markets, as tariff-driven cost pressures weigh on retail clients, alongside intensifying competition from larger digital platforms.
Pinterest’s situation highlights the challenge digital platforms face in balancing user growth with monetization in a fragmented market. Its ongoing investments in AI and product innovation foster optimism, yet the path to consistent profitability remains cautiously viewed by investors.
Pinterest’s ability to maintain user engagement while effectively converting that into advertising and commerce revenue will be critical. The recent stock reaction serves as a reminder that, for platforms like Pinterest, strong user numbers alone are not enough to satisfy market expectations, they must translate into robust financial performance, especially in a competitive and cost-pressured environment.
