Technology · August 2, 2022

Pinterest stock jumps after Elliott says she’s the biggest investor

Pinterest shares rose 13% on Tuesday, a day after activist investor Elliott Management confirmed that it is Pinterest’s largest investor.

The move comes despite Pinterest’s disappointing second-quarter earnings Monday night.

“Pinterest is a highly strategic company with significant growth potential, and our belief in the value opportunity in Pinterest has made us the company’s largest investor today,” Elliott said Monday. Elliott’s stake in Pinterest was reported in July by The Wall Street Journal, which reported at the time that the firm had built a stake of over 9% in the company.

Pinterest’s global monthly active users fell 5% year over year to 433 million, and while that kind of decline is alarming for a social media app that relies on eyeballs to attract advertisers, analysts were expecting one sharper decline to 431 million users.

The company’s financials were grim, as was commentary on what’s to come this quarter. Pinterest said it estimates that its third-quarter revenue will grow “at a mid-single-digit percentage year-over-year,” below analysts’ forecasts for revenue growth of 12.7%.

Analysts at Goldman Sachs said Pinterest’s earnings report was “a tale of two different narratives.” They wrote in a note on Tuesday that the company is in a volatile macro environment in the short term but could reach its “long-discussed” potential in the long term.

The analysts said that management’s “comment on expected margin growth in 2023 (although formalized guidance is not yet available) could position PINS as a platform that will sustain solid revenue growth and profitability if opportunities are embraced.”

Analysts at Morgan Stanley said in a note on Tuesday that while Pinterest’s earnings were better than feared, management has yet to successfully improve some areas of the company.

“PINS can be traded tactically given the positioning and renewed hope for a turnaround from management,” they said, “but as outlined above, we need more detail on why/how management intends to take advantage of the PINS opportunity…and.” / or Evidence to partners that trends in these areas are improving.”