Pinterest Continues to Lose Monthly Active Users

Pinterest, the image-based social media app, is experiencing continued losses in monthly active users.

During the lockdown due to the pandemic, Pinterest experienced a surge of customer engagement. But now, as economic reopening is gaining momentum, Pinterest is seeing a reversal of that trend.

Pinterest Is Building a Streak It’s Not Happy About

The loss is attributed to people spending less time at home, decreasing inspiration for at-home activities like cooking, DIY and home decor.

Management noted increased competition from other entertainment options, and to counter this trend, Pinterest is investing in a new short-form video format for content creators.

Pinterest is free to join and use, and the company makes money by showing advertisements to users browsing its platform. As more users and their engagement grow, Pinterest’s opportunities to display advertisements also grow.

Pinterest Gives Shareholders a Sigh of Relief

The rise in ARUP (Average Revenue Per User) is a pleasant development that drove revenue of 20% in the fourth quarter of the financial year. Currently, investors are worried that businesses facing supply chain disruptions would pull back ad spending. And, of course, there was some pullback.

With difficulty fulfilling existing demand and facing rising costs in other operations, consumer packaged goods companies pulled back spending on Pinterest. Regardless, that was offset by a boost from retailers during the holiday season.  

The company expects revenue growth to stay in the high double digits, despite their continuous user loss and, of course, the decreasing engagement. That forecast was a sigh of relief after rival Meta Platforms forecasted revenue growth of just 7% at the midpoint of the first quarter.

With Meta’s guidance, investors feared the worst for Pinterest. Therefore, the high-double-digit revenue guidance played a prominent role in driving Pinterest’s stock higher by 11% the day after the earnings release.