Pinterest Shares Plummet Despite New AI Features

Pinterest recently experienced a sharp decline in its stock value despite implementing new artificial intelligence features. Shares plummeted by 21% on Wednesday following the company’s disappointing guidance and concerns over reduced advertising expenses linked to trade tariffs.

Pinterest’s AI Innovations and the Market Response

The digital platform introduced an AI tool known as “Pinterest Assistant.” This feature aims to enhance shopping experiences by offering tailored product recommendations. Built on Pinterest’s proprietary “taste-graph” model and advanced “multimodal” visual-language technology, the assistant is designed to engage its 600 million users.

Despite these innovations, the financial outlook cast a shadow over Pinterest’s prospects. According to CEO Bill Ready, the company has positioned itself as a leader in visual search. However, investors responded negatively to the financial results.

Financial Performance

• Adjusted earnings per share were reported at 38 cents, falling short of the expected 42 cents.
• Revenue met expectations at $1.05 billion, an increase of 17% year-over-year.
• Fourth-quarter revenue guidance was between $1.31 billion and $1.34 billion, below analyst predictions.

Chief Financial Officer Julia Donnelly highlighted concerns regarding ad spending. She mentioned a noticeable slowdown in the U.S. and Canada, particularly among larger retailers grappling with tariff-related margin pressures. This uncertainty is likely to persist, impacted further by additional tariffs implemented in Q4.

Impact of Tariffs on Business

In September, the U.S. government imposed new tariffs, including a 10% duty on imported timber and 25% on kitchen and bathroom furnishings. These tariffs may influence consumer behavior and spending within the home furnishing sector.

Comparative Performance in the Digital Advertising Space

Pinterest’s disappointing report contrasts sharply with its competitors. Other major players in the digital advertising industry have seen significant revenue growth:

• Meta reported a 26% increase in revenue.
• Amazon’s online advertising unit grew by 24%.
• Alphabet’s advertising sales rose nearly 13%.
• Reddit saw a remarkable 68% surge in sales.

The stark difference in performance emphasizes Pinterest’s current struggles within the competitive landscape of digital platforms.