Pinterest shares surge as strong ad spend defies tariff uncertainty

Reuters
05-09
Pinterest shares surge as strong ad spend defies tariff uncertainty

May 9 (Reuters) - Pinterest PINS.N shares jumped over 12% in premarket trading on Friday, after a strong quarterly revenue forecast allayed investor jitters about the uncertainty of advertising spending on its platform amid global economic volatility.

Its robust first-quarter revenue positions it alongside peers Reddit RDDT.N and Facebook-parent Meta META.O, which also saw strong top-line results at a time when deepening global trade tensions have clouded the outlook for many firms dependent on marketing spend.

A shifting U.S. trade policy coupled with escalating geopolitical tensions have sparked fears of a spike in inflation levels and a possible recession, prompting a broader pullback in consumer and enterprise spending.

However, Pinterest's focus on strengthening the effectiveness of its artificial intelligence tools for creating ad campaigns and a growing Gen Z userbase makes it an attractive destination for marketers.

Pinterest's global monthly active users rose 10% from a year earlier to 570 million in the first quarter, exceeding analysts' expectations according to data compiled by LSEG.

"We believe Pinterest's strategic focus on AI improvements and international expansion is yielding results, particularly in shopping experiences and targeted advertising capabilities," said Angelo Zino, senior equity analyst at CFRA Research.

Pinterest flagged a reduction in spending from Asian e-commerce retailers due to the roll-back of the "de minimis" exemption earlier this year, which led notable Chinese advertisers including online marketplace Temu and fast-fashion retailer Shein to slash ad budgets.

Barclays analysts said they expect "trends to worsen in e-commerce advertising" later this year if and when tariffs impact consumer spending trends.

If premarket gains hold, Pinterest is set to add more than $2.5 billion to its market cap.

The company trades at 14.51 times the estimates of its earnings for the next 12 months, compared with Reddit's 67.65 and Snap's SNAP.N 22.19.

(Reporting by Zaheer Kachwala in Bengaluru; additional reporting by Jaspreet Singh; Editing by Krishna Chandra Eluri)

((Zaheer.Kachwala@thomsonreuters.com;))

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