Pinterest Records Growth Deceleration with COVID-19 Restrictions Ease

Pinterest Inc. recorded one of the most significant setbacks in sixteen months after reports that fewer users had logged into their visual search service during the second quarter.

Pinterest, a visual search service that allows users to collect, save, and group images by themes and ideas, was one app users turned to during the pandemic. Many people were attracted by the crafts and DIY projects that keep them entertained and occupied. The company logged in only 454 million monthly users active on the app in the last quarter, which was undoubtedly lower than analysts had predicted. The first three quarters of the year recorded 478 million active users, but there was a significant drop in the second quarter. The user growth deceleration has been attributed to the ease in restriction hitherto established during the pandemic, causing most people to turn to crafts and DIY projects to keep themselves occupied. Now that the curbs have eased, many more people want to step and have more physical interaction and do a lot more than they could do during the restrictions.

This development resulted in a nearly 20 percent drop in shares in the extended trade. To investors, surpassing revenue estimates in the second quarter did not draw so much attention; instead, they became more concerned with the drop in monthly active users.

The pandemic has resulted in a steep rise in advertisement spending and a surge in user growth among social media companies due to the lockdown. Now that the lockdown is gradually easing off, analysts are speculative about the stability of this growth trend.

Pinterest has now set its expected revenue growth to be in the low 40% range by the end of the third quarter. They expect that operating expenses will grow modestly quarterly as plans are underway to resume brand marketing campaigns come the fourth quarter. 

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