Pinterest Inc (PINS.N) on Thursday said user growth in the United States was decelerating as people who used the platform for crafts and DIY projects during the height of the pandemic are stepping out more as curbs ease.
Shares of the digital pinboard site slumped nearly 20% in extended trade, with investors looking past Pinterest beating revenue estimates in the second quarter, as overall monthly active users (MAUs) fell short of expectations.
Social media companies worldwide saw digital ad spending and user growth surge as lockdowns accelerated the shift to e-commerce, but analysts are now concerned if those gains are here to stay.
“Pinterest’s use case was very compelling for people staying at home during the pandemic, and with the economy opening up, there is less focus on what Pinterest is best for,” Wedbush analyst Ygal Arounian said.
Overall MAUs, a widely watched metric, rose by only 9% to 454 million during the quarter. Analysts had estimated 487.1 million, according to Refinitiv IBES data. It had risen 30% in the prior quarter.
“For the past year, we’ve highlighted how people came to Pinterest for inspiration to reinvent their lives during such a difficult time. Now as the world opens up, we’re seeing the similar effect in the opposite direction,” Chief Executive Officer Ben Silbermann said during a call with analysts.
Pinterest’s MAUs in the United States, a major market for the company, was nearly 7% lower as of July 27. Its global MAUs grew by about 5%.
The shift in user engagement was more visible in web than mobile app users, Pinterest said, adding that web users tended to be, on average, less engaged and generated lower revenue.
Total revenue more than doubled to $613 million in the quarter versus analysts’ average estimates of $562.1 million.