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Pinterest stock is significantly lower in Monday trading. Now that talks to be acquired by PayPal are over, Pinterest investors are cautious on earnings.

Dreamstime

With the collapse of


Pinterest

‘s discussions for a potential acquisition by


PayPal Holdings
,
investor focus shifts to the social-commerce company’s earnings outlook, and potential risks from both slowing overall ad sales, and


Apple

‘s tougher new rules on tracking consumer behavior on iPhones across apps and websites.

Pinterest (ticker: PINS) stock tumbled 12% Monday to $50.95, dropping below where it was before last week’s surge on reports that PayPal (PYPL) was in talks to buy the company for about $70 a share. PayPal said in a brief statement Monday that it was not pursuing a Pinterest acquisition “at this time.” The stock is down about 8% from where it was before news of the potential deal broke.

Last week, social-media stocks sold off after Snap (SNAP) reported disappointing third-quarter results and provided softer-than-expected guidance for the December quarter. Snap said ad revenue was down in the quarter based on two primary factors.

Snap placed part of the blame on supply-chain troubles—companies struggling to meet current demand aren’t spending money on direct-response ads to generate orders they can’t fill. Snap also said results were hurt more than expected by changes in Apple’s iOS privacy rules that make it harder for advertisers to target the audiences they want and to measure the effectiveness of their ads.

The same factors could also impact Pinterest’s results.

In a lengthy undated post on its website, Pinterest laid out how it might be affected by Apple’s changes in ad-tracking policy.

The company noted that it isn’t totally reliant on Apple’s ad software to understand consumer intent. “As a platform where people come with natural intent to search, save, and plan around interests, we’re…able to use these rich on-platform signals to make continual improvements to our various advertising solutions,” the company wrote. “These first-party signals are unaffected by Apple’s iOS14 changes and will ensure that advertisers are able to continue reaching relevant Pinners looking for content and inspiration from brands.”

But the company also noted that for audiences that rely on “off-platform signals, we expect there to be a reduction in audience size from Pinners who opt-out.”

While Pinterest did not give detailed guidance in reporting June-quarter results, the company did say it expects revenue growth to be in the low 40s on a percentage basis. Street consensus estimates call for revenue of $631.2 million and profits of 23 cents a share. For the December quarter, analysts are projecting $876.7 million in revenue and profits of 47 cents a share.

Pinterest will report September-quarter results on Nov. 4.

Write to Eric J. Savitz at eric.savitz@barrons.com

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