(Reuters) – Pinterest Inc shares slumped as much as 17% on Friday after the online scrapbook company’s disappointing annual forecast shook investors’ faith in his ability to turn in a profit quickly.
The logo of the company for Pinterest, Inc. with the trading information is displayed on a screen on the New York Stock Exchange (NYSE) in New York, USA, April 18, 2019. REUTERS/Brendan McDermid
The decrease of the shares after Pinterest first quarterly results as a public company, took some of the gloss from its successful stock market debut last month. Until Thursday, Pinterest, the shares had risen 62% since its April 18 opening.
The company, which gets revenue through the ads that are placed under the “pins” or posts that users upload to the site, the forecast for the full year revenue of $ 1.055 billion to $1.08 billion, mostly in line with analysts estimate.
“We remain of the opinion that Pinterest the early phase of the international and the self-serve, offer meaningful growth in the course of the time, but they require a powerful, durable performance, and Pinterest do not simply flip a switch on one of them,” JPMorgan analysts said in a statement.
Two real estate groups said it would be the company at least two years profitable.
“We see a low daily involvement in comparison with peers of the same age will be the limit of the average revenue per user potential,” rosenblatt Securities analyst Mark Zgutowicz said.
Most brokers are optimistic about the stock, with four of them rating the stock “buy” or higher, and only recommending “sell”. The twelve brokerages have a ‘hold’ rating.
In the first quarter, Pinterest net loss narrowed to $41.4 million in the quarter ended March 31 of € 52.7 million a year earlier.
Morningstar-analyst Ali Mogharabi said that he expects the company to be profitable by 2021, and that the results of the first quarter Pinterest on the progress in are profitable.
“While about 93% of the total revenue from the U.S., we believe that growth opportunities remain in the market, such as Pinterest can make more money with its U.S. users over the increasing ad loads (similar to native advertising), and adding more advertisers,” says Credit Suisse analyst Stephen Ju.
Shares were down 13.7 percent at $26.62 in the morning trade, after falling as much as 16.7 percent earlier.
Reporting by Manas Mishra in Bengaluru; Editing by Saumyadeb Chakrabarty