Pinterest Shares Drop After Jefferies Downgrade

Pinterest (PINS) shares declined on January 13 after analysts at Jefferies downgraded the social media platform’s rating from “buy” to “hold,” citing concerns about its advertising revenue growth. The firm also adjusted its price target for Pinterest, lowering it to $32 from a previous $40. Analysts tracked by Visible Alpha maintain a consensus price target of approximately $39.

In response to the downgrade, Pinterest’s stock dropped over 1% during recent trading and has declined roughly 18% over the past year.

Jefferies highlighted that Pinterest continues to face challenges in transitioning advertiser spending from experimental campaigns to consistent, “always-on” ad buys. The firm also expressed skepticism about the immediate impact of Pinterest’s newly introduced Performance+ artificial intelligence (AI) advertiser tools, suggesting it may be premature for these innovations to achieve the mid-teens revenue growth Wall Street projected for the first quarter.

While Wall Street analysts anticipate 13% growth, Jefferies projects a more conservative figure of 10%.

Pinterest CEO Bill Ready emphasized during the company’s third-quarter earnings call in November that AI investments are beginning to yield results. He pointed to lower-funnel advertising tools, such as direct links, as the fastest-growing segment of the platform. However, despite reporting 18% revenue growth during the quarter, Pinterest fell short of analysts’ expectations.

The downgrade and tempered revenue projections highlight the hurdles Pinterest faces as it seeks to solidify its position in the competitive digital advertising landscape.