Piper Sandler downgrades Pinterest on growth concerns

Investing.com -- Piper Sandler downgraded Pinterest Inc (NYSE:PINS) to "neutral" from "overweight," amid mixed performance in recent quarters and doubts about the company’s ability to meet growth expectations for 2024.

Shares were down more than 3% at $32. 

Brokerage said revenue growth expectations for 2024 appear overly optimistic following recent guidance. It flagged Pinterest’s advertising business, noting that its new Performance+ product has shown inconsistent results.

A recent survey of ad buyers also highlighted challenges, as competitors like TikTok and X (formerly Twitter) gain momentum in the mid-sized advertising market.

“With unresolved questions post the 3Q print, we lower estimates, downgrade to Neutral from Overweight until we have more confidence in the model,” wrote analyst as it lowered their price target to $36 from $41.

Pinterest has been striving to grow its revenue but has faced pressure as advertisers shift strategies in a rapidly evolving digital market. The company’s recent guidance for the holiday quarter suggested slower-than-expected growth, adding to investor concerns.

While Pinterest remains a popular platform for visual inspiration, the brokerage said it will wait for clearer signs of stability and improvement in its business model before taking a more optimistic stance.