Pinterest shares surge 20% on strong Q1 forecast & AI-powered Ad growth

According to a Reuters report, shares of Pinterest (PINS.N) soared 20% on Friday after the company projected first-quarter revenue above market expectations, signaling that its AI-powered advertising tools are driving increased ad spending on the platform.

Pinterest has been focusing on direct response ads, which prompt specific user actions like app downloads or website visits. The company's investment in AI-driven tools, such as the Performance+ suite, has significantly enhanced ad targeting through automation. CEO Bill Ready noted that advertisers using these AI tools now require 50% fewer inputs to create a campaign, making the platform more attractive for marketers.

"If you're a smaller ad platform, the less time and more automated you can make it for advertisers, the easier it is to get them to try you out," said Bernstein analyst Mark Shmulik, adding that Pinterest’s growth momentum appears sustainable.

In its latest earnings report, Pinterest posted record fourth-quarter revenue, as advertising demand from retail, technology, and financial services helped offset weaker spending from the food and beverage sector. Following the strong results, at least 27 brokerages raised their price targets for Pinterest.

The company’s first-quarter revenue forecast of $837 million to $852 million exceeded analysts' average estimate of $832.8 million, according to LSEG data. Additionally, its adjusted core earnings forecast of $155 million to $170 million was also ahead of expectations.

Pinterest’s stock, known for its volatile post-earnings reactions, is set to add more than $4 billion to its market value if gains hold. The company had a market valuation of $22.70 billion as of the last close. Previously, its stock dropped 14% in November after issuing a weak holiday quarter forecast but jumped 21% in April 2023 following a strong first-quarter earnings report.

In the fourth quarter, Pinterest reported $1.15 billion in revenue, slightly ahead of expectations, with global monthly active users reaching 553 million.

Also Read: Pinterest Predicts 20 bold trends for 2025