When the stock market opened on Tuesday, Pinterest shares skyrocketed. The company released their earnings report the day prior, which exceeded analysts' estimations for earnings and revenue, and additionally provided evidence of a thriving user base. CEO Bill Ready remarked that, amid the Israeli-Hamas skirmish, some of the companies that had pulled their advertisements from the platform had resumed investing.
Shares of Pinterest surged over 18% on Tuesday after the company significantly exceeded estimates for the third quarter, calming worries regarding potential losses in ad revenue spurred by the Israel-Hamas conflict. The digital platform posted an adjusted EPS of 28 cents, exceeding the projected 20 cents per share, and earning $763.2 million, eclipsing analysts' estimated $743.5 million.
Investors have been on edge during earnings season, as many fear how the war may impact the success of companies reliant on ad revenue. Though Adjusted EPS and Revenue estimates were exceeded, meta shares dropped in response to a wider guidance range for fourth-quarter revenue. CEO Bill Ready noted that some of the advertisers who had suspended their campaigns have returned, as well as favorable engagement numbers, to give investors confidence.
Analysts at Barclays, Morgan Stanley and Citi all had positive takeaways from the call and increased their price targets, commending Pinterest's efforts to utilize artificial intelligence to improve user experience and its growing Gen Z userbase. Citi analysts described Gen Z as making up 42% of monthly active users and saving roughly twice as much content in their first year. Both Barclays and Morgan Stanley noted the success of the Shop the Look tool, which utilizes AI to recommend similar buyable items from merchant catalogues with 70% matching accuracy.
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