Pinterest’s stock soared by 20% on Friday after the company raised its first-quarter revenue forecast, indicating that its AI-driven advertisement tools will boost ad spending on the platform. The surge was driven by Pinterest’s prediction of revenue exceeding expectations, with a focus on its direct response ads, which encourage actions like app downloads or website visits.
CEO Bill Ready highlighted the success of Pinterest’s AI tools, particularly the Performance+ suite, which automates ad targeting and reduces the inputs required for campaign creation. This has been especially helpful for smaller advertisers. “Advertisers using these tools now need 50% fewer inputs to create a campaign,” Ready explained.
Bernstein analyst Mark Shmulik noted that automating the ad creation process makes Pinterest an appealing choice for advertisers, particularly smaller ones, due to the ease it offers. Shmulik also expressed confidence that Pinterest’s progress is sustainable.
In the fourth quarter, Pinterest reported record revenue, driven by strong ad spending from the retail, technology, and financial services sectors. However, advertising spend from food and beverage companies remained weak. Following the positive earnings report, at least 27 brokerages raised their price target for Pinterest.
The company’s first-quarter revenue projection of $837 million to $852 million exceeds analysts’ consensus estimate of $832.8 million. Additionally, its adjusted core earnings forecast of $155 million to $170 million also surpassed expectations.
Pinterest’s stock value could increase by over $4 billion if the gains hold, with the company’s market valuation currently sitting at $22.70 billion. Despite volatility in stock price following earnings reports, Pinterest’s outlook remains positive, with its first-quarter projections further fueling investor optimism.
