By Dhirendra Tripathi
Investing.com – Pinterest (NYSE:PINS) stock traded 2.3% lower in premarket Tuesday after Morgan Stanley (NYSE:MS) analysts downgraded it to ‘equal-weight’ with a target of $30, citing multiple headwinds as reasons for their pessimism.
The target price is over 43% lower than the previous one. The stock closed at $26.45 Monday, up 3.8%, but is down nearly 62% in the last year.
The analysts admitted they overestimated the company’s ability to innovate and improve its user offerings rapidly. The pace of innovation is slower than they initially expected as advertising, user, and engagement trends remain challenging, StreetInsider said quoting the analysts’ report.
The analysts continue to see US time spent per user decline from1% to 19% year-over-year over the past four quarters and believe the platform’s total US user minutes have deteriorated to 2017 levels.
In addition, analyst Brian Nowak sees further uncertainties related to the shift toward lower-monetizing creator economy video offerings like those on Facebook’s Reels and YouTube’s Shorts.
While Pinterest came out flying in the fourth quarter, brushing aside concerns over the impact on its business due to changes in Apple’s privacy rules, the company last month said the new provisions could still come to weigh on it in the future.
To counter that, the company is investing more in technology and focusing on scaling up video features like Pinterest TV and Idea Pins. It’s also boosting influencer marketing, a space dominated by YouTube, Instagram and TikTok.