Reddit, Pinterest shares tumble on weak user and revenue growth
PINS•Reddit shares fell 23% in premarket trading after it warned that Google AI search features could shrink its user base, while Pinterest shares fell 8% after forecasting fourth-quarter revenue below estimates.
1. Reddit flags traffic risks
Reddit said search engine referrals fell by more than 1 million on average each week in October. If referral traffic continues to fall, daily active unique visitors could decline by a low double-digit percentage in the fourth quarter from about 130 million. Analysts cited Google's AI search features and changes to machine-translated content rankings as factors pushing search traffic down.
2. Pinterest forecasts revenue
Pinterest reported third-quarter revenue of $1.17 billion, below the $1.21 billion estimate, and forecast fourth-quarter revenue of $1.425 billion to $1.475 billion, below Wall Street estimates. Analysts said changes to the EU's de minimis exemption affected cross-border sellers sooner and more severely than expected, leaving Pinterest's European revenue flat.
3. Shares and cloud commitments
Reddit said in a filing that it extended cloud services agreements with Amazon Web Services and Google through 2029, committing to spend $880 million and $580 million, respectively, over three years. Through Thursday's close, Reddit shares had fallen about 44% this year and Pinterest shares about 23%.
