Pinterest Stock Drops 16% as Tariffs Hit Revenue and Outlook

Pinterest shares fell 16% on Thursday after the company reported weaker-than-expected revenue for the fourth quarter of 2025 and gave a soft outlook for the first quarter of 2026. CEO Bill Ready pointed to new tariffs as a main reason for the shortfall during a call with analysts, saying the pressures would likely continue.

Background

Pinterest runs a platform where people find ideas through images and links, much like digital scrapbooks for home ideas, recipes, and fashion. The company went public in 2019 and has grown steadily by attracting users who browse for inspiration and shop through its ads. Over the past few years, it added millions of users each quarter and boosted sales from advertisers who pay to show products to those users.

In 2025, Pinterest faced a mixed year. Revenue grew overall, but competition from bigger platforms like Instagram and TikTok made it harder to grab attention. The company focused on new tools to help users buy items directly from pins, a move called shoppable pins. This helped lift average revenue per user, even as growth slowed a bit. By the end of the year, monthly active users reached 619 million, up from earlier quarters. Still, advertisers pulled back spending in some areas due to economic uncertainty and rising trade barriers.

Tariffs on imports, especially from China, started biting into ad budgets late in 2025. Many Pinterest advertisers sell goods made overseas, and higher costs from duties cut into their profits. This led to less spending on the platform. Company leaders had hinted at these issues in prior updates, but the full impact showed up in the latest numbers.

Key Details

Pinterest posted $1.32 billion in revenue for the fourth quarter, up 14% from the year before but $10 million short of what analysts predicted. Adjusted earnings per share came in at 67 cents, matching expectations. Adjusted EBITDA, a measure of profits before some costs, hit $541.5 million, just under the $547 million forecast.

User and Revenue Metrics

The user base grew to 619 million monthly active users, an increase of 66 million from last year. This marked solid growth, though slower than peaks in prior years. Average revenue per user rose to $2.16, up 1.9% year over year. That shows the company squeezed more money from its audience, but not as fast as user adds.

International markets did better than expected. Growth outside the U.S. picked up speed, with users in Europe and elsewhere driving more engagement. U.S. revenue still made up the bulk, but global expansion helped offset some domestic weakness.

For the first quarter, Pinterest guided revenue to about $961 million, below the $982 million analysts wanted. EBITDA guidance sat at $176 million, missing the $205 million mark. Operating margins held steady at 22.8%, and free cash flow margins dipped slightly to 28.8%.

"Looking ahead to Q1, we expect these headwinds will continue and may become slightly more pronounced," CFO Julia Donnelly told analysts on Thursday.

The stock closed at $15.54, down 15.9% right after the report. Market value stood at $12.9 billion post-drop.

What This Means

The revenue miss and low guidance signal tougher times ahead for Pinterest. Tariffs raise costs for advertisers, who then spend less on pins and promoted content. This could slow revenue growth to 12% in the coming quarter, down from recent rates. User growth remains a bright spot, with 11% annual increases showing the platform still draws people in.

Advertisers may shift budgets if trade tensions drag on. Pinterest's focus on international users could help, as those markets face fewer tariff hits right now. The company plans to roll out more ad formats and AI tools to match user interests better, aiming to lift revenue per user further.

Investors watch how long these pressures last. If tariffs ease or Pinterest cuts costs, margins could improve. For now, the outlook points to flat or slower growth compared to 14% over the past three years. Analysts still see 14.5% revenue rises over the next year, betting on the platform's appeal to younger shoppers.

Pinterest holds $2.8 billion in cash with low debt, giving room to invest in features. Free cash flow stayed strong, covering operations and buybacks. The board approved more share repurchases, signaling confidence in the long term despite the bump.

Staff numbers held steady at around 5,000, with no big layoffs announced. Recent hires in engineering aim to speed up product updates. Users keep pinning daily, with sessions up in key categories like fashion and home decor.

The earnings call lasted over an hour, with questions centering on tariffs and ad trends. Ready stressed the team's work on diverse revenue streams beyond U.S. retail ads. Donnelly broke down the guidance math, factoring in seasonal dips and trade impacts.

Over the past year, Pinterest stock swung with market moods. It peaked mid-2025 on user gains, then slid on economic fears. This drop puts shares near lows, drawing value hunters if growth rebounds.

Smaller advertisers feel tariffs hardest, as they lack scale to absorb costs. Big brands with local supply chains fare better. Pinterest pushes partnerships to help sellers find tariff workarounds, like shifting suppliers.

Quarterly results come every three months, with the next in May. Until then, weekly user data and ad spend reports will hint at trends. The company hosts investor days yearly to share roadmaps.