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Investing.com – Shares in Pinterest (NYSE:PINS) plummeted by over 11% in premarket U.S. trading on Friday, as analysts flagged that the social media group’s second-quarter sales in the U.S. and Canada trailed its closest rivals.
In a note, analysts at Stifel said demand in the key region had been impacted by the Trump administration’s move earlier this year to suspend an import tariff exemption for items below a certain value shipped to the United States. The halt to the so-called "de minimis" exception has particularly impacted low-cost exporters out of Asia, which led to a downturn in advertising spending by these firms with Pinterest, the strategists said.
Revenue in the U.S. and Canada rose by 11% versus the prior year to $745 million, just missing Wall Street estimates of $747 million. Expectations for sales in the countries were elevated following "solid results across other ad-based names" such as Facebook-owner Meta (NASDAQ:META), Google-parent Alphabet (NASDAQ:GOOGL) and social media forum Reddit, the Stifel analysts said.
Still, a move by Asian e-commerce advertisers to shift spending away from the U.S. to other areas helped to ease the dent from the "de minimis" changes, they added.
Overall reported revenue came in at $998 million, topping forecasts of $975 million, even as ad pricing declined. Adjusted core earnings of $251 million were also above projections.
Monthly active users stood at 578 million, exceeding expectations as well, fueled in part by the picture-based platform’s popularity with Gen Z and its recent artificial intelligence enhancements, Stifel said.
Looking ahead to the third quarter, revenue was guided to be in a range of $1.033 billion to $1.053 billion, compared with analysts’ estimates of $1.03 billion.
Adjusted earnings before interest, taxes, depreciation and amortization for the current quarter are seen at $282 million to $302 million, or 28% margin at the midpoint. Analysts had predicted the margin number would be 28.4%.
Pinterest is facing a murky economic backdrop, with some advertisers possibly considering reining in expenditures until the impact of sweeping U.S. tariffs becomes clearer.
"[T]here still remains some uncertainty in planning for advertisers relating to the macro in the third quarter," the Stifel analysts said.
(Yasin Ebrahim contributed reporting.)