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Why Pinterest and Amazon Slumped Badly
The post-pandemic selloff continued last week. Pinterest (NYSE:PINS) lost nearly 20% of its value on July 30 after posting a user slowdown.
Pinterest posted an EPS of 25 cents. Revenue grew by 125% Y/Y to $613.2 million. Yet global monthly active users (MAU) grew by just 9% to 454 million. Analysts expected 484.4 million. Also, MAUs in the U.S. fell by 5% to 91 million. The weak user growth and activity is a deep concern. Pinterest has more work ahead to squeeze more revenue from each user.
The weak MAU for PINS contrasts that of Facebook and Snap, which increased DAU and MAU.
Amazon's (NASDAQ:AMZN) weakening e-commerce momentum is a concern. Amazon's quarterly earnings and sales forecast are below analyst estimates. It posted revenue rising by 27% Y/Y to $113.1 billion. Amazon Web Services was a bright spot, as sales rose by 37% to $14.81 billion. In the third quarter, Amazon expects revenue of $106 billion to $112 billion. The firm will also absorb around $1 billion in Covid-19 related costs.
The slump in PINS and AMZN stock is probably a blip. The five-to-10-year prospects for e-commerce are unchanged. Plus, the Delta variant threatens a full business re-opening. In a hybrid back-to-work model, people will still spend more online than at physical stores.
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