Piper Sandler Downgrades Pinterest to Neutral

Investing.com — Piper Sandler has downgraded Pinterest Inc (NYSE:PINS) from "overweight" to "neutral" due to mixed performance in recent quarters and doubts regarding the company's growth potential for 2024.

Shares fell over 3% to $32.

The brokerage expressed concerns that Pinterest's revenue growth projections for 2024 are overly optimistic, particularly in light of its recent guidance. They also noted challenges in Pinterest’s advertising business, specifically regarding the inconsistent results from the new Performance+ product.

A recent survey of ad buyers revealed difficulties as competitors like TikTok and X (previously Twitter) gain traction in the mid-sized advertising market.

The analyst stated, "With unresolved questions post the 3Q print, we lower estimates and downgrade to Neutral from Overweight until we have more confidence in the model," while also decreasing the price target from $41 to $36.

Although Pinterest has been working to grow its revenue, it has faced challenges as advertisers adjust their strategies in a fast-changing digital landscape. Additionally, the company’s guidance for the holiday quarter suggested slower-than-anticipated growth, raising further concerns among investors.

While Pinterest continues to be a favored platform for visual inspiration, the brokerage will remain on the sidelines until they observe clearer indications of stability and progress in its business model.