Pinterest’s gross margin just deteriorated for the second quarter in a row. In the second quarter, the gross margin fell to 75% from 79% in the previous quarter. Additionally, in the third quarter, Pinterest’s gross margin fell to 73% from 80% in the same quarter last year.
After this came to light, Pinterest management responded. The CFO said that the company is investing in models to make the product experience more personalized and relevant to our users. That is, it’s doing this to make users use Pinterest more actively, which will grow activity and revenue.
What kind of trouble is in store for the Pinterest stock?
It’s not quite as it may seem at first glance. From 2019 through the most recent quarter, Pinterest lost nearly $1.3 billion. Loss of almost $1.3 billion. While in the third quarter, the net loss was $65 million.
Thus, the company made steady progress in gross profit. All along, the company has been growing and increasing its number of users. At the same time not increase the cost of production by the same amount. Thus, the company has steadily improved its gross profit margin.
Nothing terrible is likely to happen after the third quarter. At the end of the third quarter, its cash, cash equivalents, and marketable securities were almost $2.7 billion. However, we should still expect stock returns to be below the market average after the third quarter.
