Pinterest gets "DPF'd" —  it dropped impressive earnings, but the stock plunged

Wednesday, April 28, 2021 by Robinhood Snacks | Disclosures
_When reality doesn't match the moodboard  [Kmatta via GettyImages]_

When reality doesn't match the moodboard [Kmatta via GettyImages]

Sounds like a #pinner... Pinterest's earnings yesterday were a textbook lesson in "everything is relative." Quarterly sales were up a sweet 78% from a year earlier, with international revenue nearly 3X'ing — and its net loss shrank 85%. So far, so great. Monthly active users hit 478M (double Snap's), up 30% from 2020. Sounds awesome. The reaction: shares plunged 11% after earnings...

Always in a mood(board)... Despite the awesome numbers, investors were bummed and fixated on one thing: slowing user growth. That 30% user boost sounds great – but it was Pinterest's slowest growth in a year, and it missed expectations. Last year, people flocked to Pinterest to create inspo boards for postponed weddings and Tuscan-style dream kitchens. Now...

  • Pinterest warned that user growth is slowing in the US, its most valuable market by far (Americans spend a lot, so advertisers pay more for US ads).
  • Pinterest said engagement is falling as the US economy reopens. People are eager to spend more time off-screen (white sand beach IRL).

Blame the "DPF Effect"... "Demand Pulled Forward." Thanks to the pandemic boom, user growth that Pinterest should've experienced last quarter actually happened in 2020. Netflix also blamed the “Covid-19 pull-forward” effect for its big subscriber miss last quarter: it added less than 4M subs, compared to nearly 16M in the first quarter of 2020 (aka: peak lockdown). We can expect the DPF Effect to hit other coronaconomy thrivers, too.