Shares of Pinterest Inc. (NYSE:PINS) tumbled almost 11% in Tuesday's extended session despite the social media company reporting first-quarter earnings results that beat Street estimates.
What Happened: Pinterest on Tuesday reported a net loss for the first quarter that narrowed significantly to $21.7 million from $141.2 million in the prior-year quarter. Revenue for the quarter surged 78% year-over-year to $485.2 million.
However, the image-sharing company’s monthly active users (MAUs) rose by only 30% year-over-year to 478 million in the quarter as COVID-19 pandemic restrictions eased.
“Starting in mid-March, the easing of pandemic restrictions slowed U.S. MAU growth and lowered engagement year over year as people spent less time online,” Pinterest said.
The online-pinboard company also warned that while it saw good retention in the first quarter of the MAUs it gained during 2020, it is not sure how long the retention will last. Nevertheless, Pinterest projects second-quarter revenue to rise 105% from the prior-year quarter.
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Why It Matters: Pinterest saw a surge in traffic last year as people spent more time online amid the pandemic restrictions. However, the company’s user growth has slowed this year as the economy reopens.
The slowdown in user growth has been offset by the recovery in ad spending this year amid the economic reopening. Pinterest noted that the revenue growth reflected increased adoption from medium and small advertisers.
Price Action: Pinterest shares closed 1.1% higher in Monday’s regular trading session at $77.58, but fell almost 11% in the after-hours session to $69.07.
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