Pinterest needs a status update
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4 min read . Updated: 10 Aug 2021, 05:51 PM IST - The end of Covid-19 fever dreams proves a bit of a nightmare for Pinterest
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Social-media earnings have come and gone as quickly as Twitter’s Fleets, but their impact could linger for one platform in particular.
When Pinterest went public back in 2019, it was clear the platform had a very specific user base. The company said two-thirds of its total monthly active users were female and that eight out of 10 U.S. moms were already using its platform. But nailing this niche could prove its downfall.
It isn’t as though success in social media is impossible when you begin with a narrow audience. Snap’s success over the past few years is in part a testament to the value advertisers see in its command of the Gen Z population. But not all of Pinterest’s users have proven to be lucrative thus far. For the fourth quarter of 2018, Pinterest said its average revenue per domestic user was well over $3.00. Internationally, where the majority of its users were located, users generated just $0.09 on average that quarter.
Pinterest is still early in its monetization efforts overseas, but the dynamic hasn’t gotten much better over time. Ten quarters later, Pinterest has grown its domestic user base by just under 11%, but its international footprint has doubled. As of the second quarter, Pinterest’s international users were generating just 7% as much revenue on average as those in the U.S.
So Pinterest’s value to advertisers hinges upon its ability to grow its U.S. footprint for now. Unfortunately, the company said its domestic users topped out in the third quarter of last year amid lockdowns and have since declined as consumers have stepped back out. That wasn’t the case for all smaller social-media players: Snap has continued to grow its North American users on a sequential basis in each of the last three quarters.
For Pinterest, Wall Street isn’t forecasting a dramatic uptick in users anytime soon. Analysts expect that by the end of next year, Pinterest’s U.S. users will still fall short of their pandemic peak. To sustainably grow its user base, Pinterest will need to show it can not only attract new users, but retain them.
In its public-offering filing, Pinterest noted its platform was used by more than half of U.S. millennials, providing hope that a younger audience may come to spend more time on the platform as it matured. But a recent survey of hundreds of Morgan Stanley interns shows there may be an age limit to its appeal. When asked which internet platforms they use most often, just 1% of the interns said Pinterest, even though they were allowed to choose up to three platforms. By comparison, 70% said Instagram and 41% said Snapchat. Even Facebook, which has long lost favor with younger users, garnered 15%.
Importantly, Pinterest scored nearly as poorly on a second question that asked which app the interns planned to spend more time on over the next 12 months. Only 2% of respondents cited Pinterest, even though they were able to select as many apps that applied. That budding finance professionals aren’t yet using a platform popularized by moms isn’t altogether surprising. But these interns are just the sort of young, affluent, heavy internet users Pinterest may want to work to attract to keep growing.
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Last month, Pinterest said its engagement headwinds had continued beyond the second quarter, noting that in the period from July 1 to July 27, its U.S. monthly active users had declined about 7% year on year, while its global monthly active users had grown just 5% year on year. Assuming that trend continues throughout the quarter and using last year’s third quarter numbers as a guide, Wall Street’s estimates for U.S. and global users look overly optimistic.
Fueled by the pandemic, Pinterest benefited from a big, elongated holiday shopping season last year. So it is possible that tighter Covid-19 restrictions like renewed lockdowns could change the game for the image-sharing platform later this year. But, given we are already halfway through the third quarter, workers are filtering back into offices and U.S. schools look poised to open in the coming weeks, it doesn’t seem like Pinterest’s users will be relegated to their homes again just yet.
Pinterest says visualizing the future on its platform helps bring it to life for its users. But after a year at home, it seems like today’s youth is ready to skip the mood boards and get straight to work. Nearly 50% of Morgan Stanley’s interns say they’ll be spending more time on LinkedIn in the coming months.
After a terrific run last year, it is time to put a pin in Pinterest. The platform will likely continue to be loved by its core audience, but as Facebook and Snapchat rack up new users as people continue to socialize, travel and dine out again, Pinterest looks relatively uninspired.
This story has been published from a wire agency feed without modifications to the text
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