Pinterest Shares Plunge Nearly 17% as Tariffs Weigh on Earnings

Shares of Pinterest fell nearly 17% on Friday after the company reported weaker-than-expected fourth-quarter earnings, citing tariff-related disruptions that dampened advertising spending by major retail clients.

The social media platform posted fourth-quarter revenue of $1.32 billion, slightly below analyst estimates of $1.33 billion, according to LSEG data. Net income dropped sharply to $277 million, down 85% from $1.85 billion a year earlier.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) came in at $541.5 million, missing expectations of $550 million.

For the first quarter, Pinterest projected revenue between $951 million and $971 million, also below analysts’ forecasts of $980 million, adding to investor concerns about near-term growth.

Tariffs Hit Advertising Budgets

Chief Executive Officer Bill Ready said the company absorbed what he described as an “exogenous shock” tied to tariffs, which disproportionately affected large retail advertisers.

“Our high mix of large retailers relative to some of our peers has resulted in us feeling more of an impact,” Ready said.

Major retailers, particularly those exposed to higher import costs, scaled back advertising budgets in response to tariff pressures and broader macroeconomic uncertainty. Pinterest’s revenue mix, which leans heavily toward retail advertising, left it more vulnerable than some competitors.

The company’s exposure to the U.S., Canada and Europe advertising markets further intensified the effect, as advertisers reassessed spending amid ongoing trade policy uncertainty.

Analysts Turn Cautious

Following the earnings report, Citigroup downgraded Pinterest shares from Buy to Neutral, citing reduced visibility from large advertisers in North America and Europe, partly due to tariffs and challenges in verticals such as home furnishings.

Meanwhile, analysts at Goldman Sachs said Pinterest’s revenue performance is likely to remain pressured in the near term by macroeconomic headwinds, including tariffs and shifting consumer spending patterns.

However, Goldman Sachs noted that management remains optimistic about its long-term growth strategy, particularly efforts to diversify the advertiser base and strengthen automation and performance-driven advertising tools.

Strategic Pivot Toward AI

Pinterest also announced plans earlier this year to reduce its workforce by less than 15% and cut office space as part of a broader restructuring initiative focused on artificial intelligence.

The company said it is reallocating resources to AI-focused teams and prioritizing AI-powered products and advertising capabilities, aiming to improve targeting efficiency and performance metrics for marketers.

Despite the earnings disappointment, user growth remained strong. Fourth-quarter global monthly active users rose 12% year-over-year to 619 million, an all-time high, with particularly strong growth among Gen Z users.

While the platform continues to expand its user base, investors are weighing whether operational adjustments and AI investments will be enough to offset near-term advertising softness linked to trade-related uncertainty.