Pinterest share price plunge 19.05% after posting larger-than-expected losses

Social network scrapbooking app Pinterest’s shares plunged by as much as 19% during after-market trading on Thursday after the firm posted an adjusted loss per share that was below estimates. Its full-year outlook also fell short.

Shares of Pinterest sank to as much as 19.05% or US$5.88, at US$24.99 in after-market trading.

As of 5.37am EDT, Pinterest clawed back some losses but the counter was still lower by 15.39% or US$4.75, at US$26.11.

The firm had debuted on April 18 at US$19 per share and its stock had jumped 28% on its first trading day, ending the day's trading at US$24.40. The tech stock has since observed steady gains in its share price and had closed Wednesday's session higher by 7.79% or US$2.23, at US$30.86.

Pinterest earnings report highlights

The firm had posted a loss per share of US$0.32 per share, which was deeper that the US$0.10 loss Wall Street had predicted.

First quarter sales rose 54% compared to a year ago at US$201.9 million, above estimates of US$200.8 million.

Net loss narrowed to US$41.4 million for the quarter, down from the US$52.7 million in losses made in the same period a year ago.

For the full-year, Pinterest expects revenue to come in at between US$1.06 billion to US$1.08 billion, which was lower than the US$1.09 billion expected.

Competitive online advertisements landscape

Investors are concerned with the app’s path to profitability and how Pinterest can continue to compete for digital advertisement revenue against social network giants such as Facebook.

‘Risk factors include competition for digital advertising budgets, the path to profitability in coming years and dual-class stock structure and management stability,’ said UBS analysts in a report.

‘Despite strong fundamentals and a promising runway for future growth, we see the current risk/reward on shares as balanced given the stock performance and valuation since (its) initial public offering,’ the analysts added.

For 2018, Pinterest hit about US$756 million in revenue from online advertisements, a 60% growth rate that accelerated from the previous year. The firm’s net loss had shrank from US$130 million in 2017 to US$63 million last year.

Launched around 2011, Pinterest which allows users to save images and links from websites on digital pin boards, reported 291 million monthly active users for the first quarter, a sum which follows the earlier guidance it had made in its prospectus.

The firm had 265 million monthly active users last year.