By Angela Palumbo
Pinterest earnings show that large companies like Meta Platforms are winners in an environment where advertisers pull back spending.
The photo-sharing website's fourth-quarter earnings were in line with Wall Street estimates, but revenue missed expectations. The company also said it expects first-quarter revenue to be between $951 million to $971 million, which was well below Wall Street estimates of $980.8 million.
Pinterest stock dived 22% to $14.40 and was on pace for its lowest close since April. 3, 2020, according to Dow Jones Market Data.
Management said on its earnings call Thursday night that revenue was being pressured by advertising headwinds. Pinterest makes almost all of its revenue from ads, making the company especially vulnerable to changes in the space.
CEO Bill Ready said on the earnings call that the largest retailers have been affected by rising costs due to tariffs, leading them to pull back on ad spending across the industry in order to protect their margins.
"Our higher mix of large retailers relative to some of our peers has resulted in us feeling more of an impact," Ready added.
Meanwhile, Meta, a much larger company that also makes most of its money from advertising, didn't report the same problem.
Meta said on Jan. 28 that fourth-quarter advertising revenue rose 24% from the previous year to $58.1 billion, ahead of estimates. The company also said on its earnings call that the average price per ad increased 6% year-over-year, "benefiting from increased advertiser demand."
Evercore ISI analyst Mark Mahaney noted Pinterest's slower growth in ad revenue.
"Pinterest has been and is a well-run company that is solidly profitable, but the company has gone from growing ad revenue at premium rates to the overall industry to now growing more slowly than the overall industry. And it is unclear to us that it can easily or quickly recover to premium growth," Mahaney wrote Friday. He downgraded shares of Pinterest to In Line from Outperform and cut his price target to $25 from $40.
Meta has been focusing on improving its ad revenue through the use of artificial intelligence. Brands can target their ads using AI tools, like Advantage+. These improvements have helped Meta attract advertisers even as companies are being more stringent with their spending. This is buoyed by the popularity of Meta's social media apps, like Facebook and Instagram, which see massive amounts of users across the globe every day.
"While tariffs are a bigger headwind for Pinterest vs peers, AI driven ROAS [return on ad spend] improvements at larger platforms appear to be impacting Pinterest's ability to capture incremental ad budgets," BofA Securities analyst Justin Post wrote Friday.
Post downgraded shares of Pinterest to Neutral from Buy and cut his price target on the stock to $19 from $39. He says competition is only going to get more challenging in the near term, as players like Alphabet's Google and OpenAI's ChatGPT implement ads into their AI products.
Shares of Pinterest have fallen 62% over the past 12 months. The stock is now trading at 7.9 times earnings expected over the next 12 months, far below its five-year average of 29.1 times forward earnings.
Pinterest has introduced its own AI products for advertisers, like Performance+. AI updates are also available for users in the app to give a more personalized experience. Global monthly active users rose more than expected to 619 million in the quarter.
"We've taken Pinterest from a platform with declining users into a growing, AI-powered, visual-first shopping assistant and search destination that has now put up 10 straight quarters of record high users," Ready said on the earnings call.
Write to Angela Palumbo at angela.palumbo@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
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February 13, 2026 12:52 ET (17:52 GMT)
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