Pinterest Inc. saw its equity plummet over 20% in premarket trading on Friday after announcing that its quarterly revenue outlook had been negatively affected by large U.S. retailers pulling back on advertising amid uncertainty tied to tariffs. The company last month enacted workforce reductions of under 15% as part of a restructuring that, according to CFO Julia Donnelly, could hamper performance in the near term while the firm reorganizes and rebuilds its go-to-market teams.
The company said the reduction in ad spend by major retail advertisers was linked to tariff-induced uncertainty, a factor that directly hit its revenue forecast. That disclosure heightened the strain on a business already contending with softer retail advertising demand.
Several competitive and market dynamics are adding to Pinterest's challenges. In January, Meta pointed to strong momentum in e-commerce advertising, while TikTok avoided removal from the U.S. market despite legal and political pressure. OpenAI has entered the advertising arena with U.S. ad placements on ChatGPT, expanding the roster of firms pursuing the same marketing budgets.
Google has intensified its commerce initiatives through shopping-focused enhancements to its Gemini chatbot and AI-driven search, increasing competition for digital ad dollars. Bernstein analysts noted the likelihood of AI-driven Pinterest-like products emerging from larger players, specifically naming Meta, OpenAI, and Amazon as potential sources of such offerings.
Market reaction was swift: at least 16 brokerages reduced their price targets on Pinterest's shares. If the premarket decline held into the open, the company stood to lose more than $2 billion from a market value previously cited at $12.52 billion, and the stock was positioned to open at its lowest level since April 2020.
On valuation metrics cited, Pinterest was trading at 9.49 times estimated earnings for the next 12 months. For comparison, the figures noted were 9.42 for Snap, 29.99 for Reddit, and 21.41 for Meta. The prior year, Pinterest said it would acquire adtech firm tvScientific as part of its push into TV ad inventory for its core consumer goods and retail advertiser base.
Contextual note: The company flagged that rebuilding go-to-market teams after the staff reductions could cause short-term operational disruption. The combination of reduced retail ad spend, heavy competition from larger technology companies, and downward revisions by multiple brokerages created a concentrated set of pressures reflected in the stock's steep premarket decline.