Pinterest shares jumped 20% on Friday after the company forecast first-quarter revenue above estimates, signaling that its AI-powered tools are driving ad spending. The platform has focused on direct response ads, which encourage actions like app downloads and website visits.
Its AI-powered Performance+ suite has improved ad targeting with automation, reducing advertiser inputs by 50%, according to CEO Bill Ready. Analyst Mark Shmulik noted that making advertising easier attracts more users, especially for smaller platforms.
Pinterest posted record fourth-quarter revenue, with strong ad spending from retail, technology, and financial services offsetting weaker food and beverage marketing. The company’s first-quarter revenue forecast of $837 million to $852 million exceeded analysts’ $832.8 million estimate. Adjusted core earnings projections of $155 million to $170 million also surpassed expectations.
At least 27 brokerages raised their price targets on Pinterest following the report. If gains hold, the company’s market value will increase by over $4 billion from its previous $22.7 billion valuation.
Pinterest’s stock has a history of volatility after earnings reports. Shares fell 14% in November after a weak holiday quarter forecast but surged 21% following strong first-quarter results in April. Fourth-quarter revenue came in at $1.15 billion, slightly above estimates, with global monthly active users reaching 553 million.
Pinterest currently trades at 17.88 times its estimated earnings for the next 12 months, compared to Meta’s 27.37 and Snap’s 25.40.
Also read: Alphabet to Boost AI Investments Despite Cloud Revenue Slowdown
