Pinterest Tumbles After Weak April Revenue Spurs Downgrade

(Bloomberg) -- Pinterest Inc. shares tumbled on Wednesday, after the social-media company warned about weak advertising as a result of the pandemic and reported a revenue decline in April.

Analysts were cautious about the report, with MKM Partners noting the revenue for the past month was “surprisingly weak” relative to peers like Facebook or Snap. D.A. Davidson wrote that the Covid-19 outbreak was “having a greater negative impact” than expected, and downgraded its view on the shares.

The stock tumbled as much as 17%. However, shares remain up nearly 70% from a March low.

Here's what analysts are saying about the results.

D.A. Davidson, Tom Forte

Downgrades to neutral from buy. Price target lowered to $19 from $21.

“The coronavirus outbreak is having a greater negative impact on its monetization than we had initially forecast,” and there is a lack of near-term visibility.

“To management's credit,” it is moving ahead with its investment plans. “However, when combined with sales pressure, we expect this to result in meaningful near-term deleverage” and wider adjusted Ebitda losses.

MKM Partners, Rohit Kulkarni

Trends for April were “surprisingly weak” relative to peers like Facebook or Snap.

Pinterest “remains in the very early stages as far as monetization and international expansion is concerned,” and it is unlikely to see “significant multiple expansion from today's levels.”

Neutral rating, $18 price target. Is looking for “evidence of consistent execution and upside to our estimates” to turn more positive.

Susquehanna Financial Group, Shyam Patil

Trends in April were “a bit worse than hoped, but it's good to see that investments in shopping and full-funnel features have paid off.”

Neutral rating, as the risk profile “is more balanced” at current levels. Still likes the long-term potential given the “the valuable core user base, social commerce niche, and monetization opportunity over time.” Price target cut to $19 from $30.

What Bloomberg Intelligence Says:
“An accelerated focus on automated ad buying and performance-based advertising related to shopping should help margins recover faster if ad demand rebounds by year-end.”
- Analyst Jitendra Waral
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