Pinterest experiences a downturn following the declaration of reduced advertising expenditure in the significant market of the United States
Pinterest, the popular online platform known for its visual inspiration, is facing challenges in its advertising sector. The company's user growth in key markets like the U.S. and Europe has stagnated or even declined, limiting the potential for ad revenue expansion.
In the latest quarter, Pinterest added 8 million users, a significant drop from the 17 million it gained in the first quarter. This user base stagnation in the U.S. and a decline of 2 million in Europe, the primary regions generating the bulk of its advertising revenue, has restricted new advertising opportunities [2][3].
The slowdown in user growth is not the only challenge Pinterest is facing. Macroeconomic uncertainties and pressures on ad budgets, exacerbated by U.S. tariffs that increase costs and complicate international trade dynamics, have led advertisers to reduce spending on platforms like Pinterest. This has contributed to a recent sharp drop in Pinterest’s stock trading volume and a decline in share price by 2.68%, amid concerns over Q3 revenue growth [1].
Pinterest reported overall revenue growth of 17% year-over-year to $998 million in Q2 2025. However, the company's quarterly adjusted profit per share of 33 cents fell short of expectations of 35 cents on Thursday, causing Pinterest shares to plunge about 15% on Friday [4].
The company is not immune to the effects of U.S. tariffs. The suspension of the exemption that allowed packages valued at or under $800 to be shipped to the U.S. without facing import duties is a factor. This has led to increased costs for Asian e-commerce companies, forcing some to scale back their U.S. marketing budgets [1].
Despite these challenges, Pinterest continues to invest in shopping tools and personalization to boost engagement and attract more ad dollars. However, these investments are pushing up costs just as revenue growth is under pressure [5].
The growth in "Rest of World" markets is not yet monetizing well due to immature digital ad sectors. Meanwhile, advertising rates in North America are typically higher than those in Europe and home markets. This means that the weaker ad spending is particularly noticeable in North America [6].
The stalled user growth is a "significant" concern, according to AJ Bell head of financial analysis Danni Hewson. The revenue growth at Pinterest is under pressure, with a 25% decline in advertising prices in the second quarter [2].
Roth Capital Partners analysts commented that the tariff concerns extending into the third quarter likely spooked the stock market. The user growth slowdown is especially noticeable in North America, with Pinterest warning of weaker ad spending in the U.S., its biggest market [1].
In response, Pinterest is now focusing on Europe and its home markets, where user growth may be more promising [7]. However, the company's struggles underscore the challenges faced by digital ad platforms in navigating a complex global economy.
References: 1. Bloomberg 2. CNBC 3. TechCrunch 4. MarketWatch 5. The Verge 6. AdAge 7. Reuters
- The slowdown in user growth and the decline in revenue growth at Pinterest, coupled with the pressures on ad budgets due to macroeconomic uncertainties and U.S. tariffs, have led to challenges in its finance sector, particularly in the business of technology-driven advertising.
- Despite focusing on Europe and its home markets where user growth may be more promising, Pinterest's continued investments in shopping tools and personalization, while aiming to boost engagement and attract more ad dollars, are increasing costs at a time when advertising revenue growth is under pressure, highlighting the complexities faced by digital ad platforms in the ever-evolving technology-driven business environment.
