Pinterest stock rose more than 18% on Tuesday after beating earnings estimates for the third quarter and assuaging concerns over potential ad revenue loss due to the Israel-Hamas war.
The company posted an adjusted earnings per share of 28 cents, beating the LSEG estimate of 20 cents. Pinterest also soundly beat revenue expectations, reporting $763.2 million versus analyst estimates of $743.5 million.
For much of earnings season, the market has been skittish toward companies reliant on ad revenue due to the unclear future impact of the Israel-Hamas war.Meta beat its top and bottom line projections but saw its stock dip due to its wider guidance range for fourth-quarter revenue, after finance chief Susan Li said it “observed softer ads in the beginning of the fourth quarter.”
CEO Bill Ready said Pinterest is not immune to those concerns, however he noted on the earnings call that some of the advertisers that had initially paused spending after the onset of the war have already returned. That, combined with strong engagement numbers, appears to have gone a long way for investors.
Analysts at Barclays were optimistic after the call and raised their price target from $27 to $29.
“It’s rare to see a company in the digital ad space (especially graphical ads) in a position to increase ad load and engagement at the same time, which is driving revenue acceleration (and before the Amazon ad selection enters the fray),” Barclays analysts wrote in a note to clients.
Pinterest’s mobile deep linking ad product was also a highlight, due to its more than 200% increase in conversion rate, wrote the Barclays analysts.
Pinterest also reported promising numbers on engagement, along with monthly active user growth of 8% year over year.
“As we enter 2024, we believe there are multiple catalysts ahead around engagement growth, ads innovation, the scaling of its Amazon partnership, and consistent margin expansion,” Citi analysts wrote in a note to investors.
Citi raised its price target by $2 as well, to $38 per share.
Another tailwind for Pinterest is the growing number of Gen Z members using the app. Citi analysts noted that as of June 2023, Gen Z accounted for 42% of monthly active users, and younger users saved roughly twice as much content in their first year on Pinterest.
Analysts at Morgan Stanley wrote that they were pleased with the way Pinterest was harnessing artificial intelligence to improve user experience. The company broke down the positive trends in engagement into three areas: “More Ideas Tab,” the “Shop the Look” feature and “Guided browsing.”
“PINS is able to use AI to recommend similar buyable items from merchant catalogues, with 70% of the products that are recommended being rated at exact or highly relevant matches,” Morgan Stanley analysts wrote in a note to investors, referencing the Shop the Look tool.
Dogecoin shot higher on Tuesday night, extending its postelection surge after President-elect Donald Trump formally announced the creation of the Department of Government Efficiency, which he referred to as “DOGE” in his statement.
Tesla CEO Elon Musk and Vivek Ramaswamy, former Republican presidential candidate and Strive Asset Management co-founder, will lead the department, Trump said in a statement. Together, they “will pave the way for my Administration to dismantle Government Bureaucracy, slash excess regulations, cut wasteful expenditures, and restructure Federal Agencies.”
Dogecoin was last up nearly 20%. It has been one of the biggest winners in the postelection rally, gaining 153% since election day compared to bitcoin’s 30% rise in the same period. It also shot past XRP this weekto become the sixth largest cryptocurrency by market cap.
Dogecoin jumped after President-elect Donald Trump announced the creation of the Department of Government Efficiency, or “DOGE.”
Memecoins are seen as a gauge of retail interest and risk appetite in crypto. When memecoin activity ramps up, it usually indicates that retail investors are participating and have an appetite to speculate further out on the risk curve.
Trump initially floated the idea of an efficiency commission in September. Since then, Musk — who has called himself the “Dogefather” in the past and has been known to make public comments about the memecoin that influence its price — has posted on his social media platform X, referring to the commission as the “Department of Government Efficiency” or “D.O.G.E.”
Dogecoin gained relevance in 2021 following Musk’s endorsement and continuous hype on social media, which has since become a big catalyst for the coin. In May that year, Musk’s posts fueled dogecoin’s rally to its all-time high of 67 cents, per Coin Metrics. Though his appearance at the time on SNL, in which he called dogecoin “a hustle,” sent its price crashing down.
The rest of the crypto market was on pause from its postelection rally. Bitcoin was trading flat at about $87,000, after briefly touching $90,000 in late afternoon trading. Crypto stocks Coinbase and MicroStrategy were lower by 1% and 2%, respectively, in extended trading.
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Elon Musk embraces Donald Trump during a campaign rally in Butler, Pennsylvania on Oct. 5, 2024.
Anna Moneymaker | Getty Images
President-elect Donald Trump said Tuesday that Elon Musk and former Republican presidential hopeful Vivek Ramaswamy will lead an efficiency group when his second term begins in January.
Trump wrote in a post that the Department of Government Efficiency, or DOGE, will “become, potentially, ‘The Manhattan Project’ of our time.” He also said the group would, “pave the way” for his next administration to “dismantle Government Bureaucracy, slash excess regulations, cut wasteful expenditures, and restructure Federal Agencies.”
Trump didn’t specify where cuts will take place or when the department may be formed. Congress hasn’t created or funded such an office. He said the group’s “work will conclude no later than July 4, 2026.”
Musk’s involvement in the envisioned group was previously promised by Trump and touted by the Tesla CEO, who spent an estimated $200 million backing the Republican nominee’s 2024 campaign, as a reason to put the former president back in the White House. Musk, who also runs defense contractor SpaceX, has reportedly been stationed at Trump’s Mar-a-Lago resort in Florida since Election Night.
Ramaswamy, who challenged Trump in the Republican primary, is co-founder of investment firm Strive Asset Management. He has opposed the widespread adoption of environmental, social and governance, or ESG, principles by companies.
Trump announced a number of other appointments Tuesday, including naming Fox News host Pete Hegseth as his pick for defense secretary and John Ratcliffe as CIA director.
The Spotify logo is displayed on a screen on the floor of the New York Stock Exchange on Dec. 4, 2023.
Brendan Mcdermid | Reuters
Spotify shares rose in extended trading Tuesday after the Swedish music streaming company issued a profit forecast for the fourth quarter that topped estimates.
Here’s how the company did, compared with what analysts expected:
Earnings per share: 1.45 euros vs. 1.72 euros expected by LSEG
Revenue: 3.99 billion euros vs. 4.02 billion euros expected by LSEG
Monthly active users (MAUs): 640 million vs. 639 million expected by StreetAccount
While the company’s earnings and revenue for the third quarter trailed estimates, investors focused instead on guidance for the current period.
Spotify said operating income in the fourth quarter will come in at 481 million euros, exceeding the average analyst estimate of 432.7 million euros, according to StreetAccount. MAUs will increase to 665 million, while analysts were expecting 659.3 million, based on a StreetAccount estimate.
Still, revenue guidance trailed estimates. The company said sales will reach 4.1 billion euros, below the average analyst estimate of 4.26 billion euros, according to LSEG.
Subscribers to Spotify Premium, the company’s ad-free membership service that allows users to select songs on an unlimited basis, increased 12% year over year to 252 million, slightly ahead of estimates.
Spotify shares rose about 8% after the report to $452.35 after rising 2.2% in regular trading. The stock has more than doubled in value this year.