Pinterest shares plummeted 20% on Wednesday after lackluster third-quarter earnings as advertising took a hit from larger retailers dealing with tariffs.
The company posted a profit of 38 cents per share adj., while analysts polled by LSEG expected earnings of 42 cents per share. However, the platform's revenue did meet analyst estimates of $1.05 billion.
"Tariff-related weakness showed up for the first time in our digital ads universe and will reinforce PINS' lack of customer diversity for the bears and higher macro sensitivity," RBC wrote in an analyst note.
Third-quarter sales in the U.S. and Canada came in at $786 million, lower than StreetAccount's estimates of $799 million.
Pinterest finance chief Julia Donnelly said during the earnings call that the company faced "some pockets of moderating ad spend" in the two countries during the quarter due to unnamed "larger U.S. retailers" that faced pressure on their margins from tariff-related issues.
Donnelly added that the company expects these trends to continue with the addition of a new tariff from President Donald Trump that will impact the home furnishings category.
Several banks lowered their price targets following the earnings report, pointing to increasing competition from larger social platforms like Instagram and TikTok and concerns over macro headwinds.
Citi analyst Ronald Josey noted that the company's international monetization could "plateau or decelerate faster than expected."
However, 81% of analysts still maintained an outperform or buy rating.