Pinterest Surges in Relief Rally to Users, Elliott as Top Holder

(Bloomberg) — Pinterest Inc. jumped after reporting resilient sales and user numbers, and Elliott Investment Management reaffirmed its stake as the company’s top shareholder, saying it approved of the company’s leadership. Shares gained about 20% in extended trading.

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Sales rose 9 percent to $665.9 million in the second quarter, the San Francisco-based company said Monday in a statement. Revenue was in line with the average estimate of analysts, according to data compiled by Bloomberg.

The company said it had 433 million monthly active users at the end of the period on June 30, about the same as the previous quarter, but a 5% drop from a year earlier. However, the numbers were higher than analysts had predicted. The site gained users during the early part of the pandemic as people stayed home, but has struggled to sustain that growth.

Pinterest is a search and discovery platform that allows users to create digital boards about travel, beauty, recipes and more. The company has worked in recent years to build a larger e-commerce business to help advertisers and retailers sell products directly on the site. Co-founder Ben Silbermann stepped down as CEO on June 28 and was replaced by Bill Ready, whose experience at Google and PayPal Inc. of Alphabet Inc. will help Pinterest continue its online sales effort.

Shares rose to a high of $24.38 in extended trading after closing at $19.99 in New York. The stock is down 45% this year, despite a 16% one-day jump on July 15 after the Wall Street Journal reported that Elliott had acquired more than 9% of the company, which would have made it the largest shareholder.

Elliott confirmed its stake on Monday in a statement, saying “Pinterest is a highly strategic business with significant growth potential, and our belief in the value creation opportunity in Pinterest today has led us to become the Company’s largest investor.” The investor hailed Ready as “the right leader to oversee Pinterest’s next phase of growth.”

Pinterest attributed the decline in active users to a drop in online traffic from a change in Google’s search algorithm, competition in the US and Canada from other “video-centric” sites and “the lingering impact from the spread of the pandemic, particularly outside the US.” .

The company said average revenue per user worldwide was $1.54, in line with estimates. Pinterest generated $5.82 in its biggest markets, the US and Canada, up 20% from the year-ago quarter.

“We strive to make the shopping experience on the platform a better, more natural shopping journey with a rich selection of products, presenting the best ideas for our users that match their aesthetic taste and preferences,” said Chief Financial Officer Todd Morgenfeld . in an interview. “And we’re building an even more personalized experience into the product to make sure that when you come to Pinterest, it feels like it’s designed for you, your interests, and your intentions. This required a large investment in machine learning and core engineering to achieve.”

Pinterest reported a net loss of $43.1 million, or a loss of 7 cents a share, compared with a profit of $69.4 million, or 10 cents, in the year-ago quarter.

Sales will rise in the “mid single digits” in the period ending in September, compared with the average estimate for a 13% increase.

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