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One of life’s most useful skills is knowing when to cut your losses. The $11.8bn digital mood-board platform Pinterest, down nearly 80 per cent since its 2021 peak, may be approaching that moment. It should pin its hopes on finding a partner, or even a buyer.
Pinterest’s problem isn’t a lack of potential. It attracts roughly 600mn monthly active users who run 80bn searches each month, and around half of those searches come from people looking to buy something. Engaged users clutching their credit cards should be catnip to advertisers, the main source of revenue for the group.
The snag is that Pinterest isn’t very good at placing ads. Or, at least, it has a technological and budgetary disadvantage relative to the giant Meta Platforms and Google parent Alphabet. As a result, many Pinterest users may gather ideas on the platform but shop somewhere else. That’s not dissimilar to what happened at Tripadvisor, which is used to plan trips but more rarely for actual bookings.
The upshot is that revenue growth, forecast this year at 11-14 per cent, has been slower than the market hoped, partly as a result of the post-tariff squeeze on advertising budgets. That’s despite the best efforts of Bill Ready, a former Google ecommerce executive brought in almost four years ago to turn the business around.
Rather than building its own costly ad-tech stack, Pinterest can instead work with those who already have. Since partnering with Google in some international markets in 2024, Pinterest’s “rest of world” revenue has more than doubled. A similar agreement with Amazon in the US has been less inspiring, perhaps because Amazon’s marketplace doesn’t quite overlap with Pinterest’s strongholds in beauty, fashion and home decor.
Another option is a sale. Retailers like Amazon or Walmart might see the appeal of adding Pinterest to their stables. Both are masters at making transactions happen but weaker at the earlier stage of shopping, when consumers are thinking about what they might want. Or there’s Bending Spoons, the Italian firm known for acquiring struggling digital businesses that would benefit from a non-public turnaround, like digital video company Vimeo and online ticketing company Eventbrite.
Pinterest is cheap. Indeed, the company has said it will buy back $2bn of its own shares by the end of June, partly funded by a $1bn investment from Elliott Investment Management last week. A valuation of less than 11 times forward earnings, according to S&P Capital IQ, may not inspire public-market tech investors focused on AI hotshots. But it should attract the shrewd eye of those combing for a neat, affordable accessory.
gaia.freydefont@ft.com
