Pinterest's new CEO faces tough road to getting users to buy

Pinterest's new CEO faces tough road to getting users to buy

Wall Street analysts are hoping that Pinterest Inc. will make a deeper push into commerce under its new chief executive, despite a muted stock reaction.

The shares of the company, which helps people collect inspirational ideas from across the internet, were down 1.4% in the morning on Wednesday following Pinterest's PINS announcement that co-founder Ben Silbermann would be stepping down and replaced by Bill Ready, a veteran of Alphabet Inc.'s GOOG, GOOGL, Google and PayPal Holdings Inc., the stock had gone up as much as 11% in after-hours trading Tuesday, according to FactSet data.

Ready wrote in a LinkedIn post that I absolutely believe that Pinterest has the potential to be a 100 year company. He said that Pinterest will look to help people engage more deeply with what they see on Pinterest, and that his background in commerce and payments gives him confidence that Pinterest can build something unique. Opinion: Pinterest's new CEO faces a rough road in getting users to buy instead of just pinning.

Colin Sebastian, Baird's spokesman, saw the move as positive for Pinterest's story.

He said that the potential for Pinterest to be a fully functional commerce platform and recent product development and leadership changes suggest that this is now a top company priority. Sebastian believes that near-term trends are likely to remain choppy for the company, but he sees the news of the CEO change as a positive step towards realizing Pinterest's potential. Mark Shmulik, Bernstein spokesman, was optimistic about the opportunity to make commerce a bigger part of the story of Pinterest.

He wrote a leadership switch after a difficult postpandemic period for Pinterest, where user declines and a tricky pivot to creators and commerce have hurt Pinterest's growth story, which is compounded by a bearish macro environment. A material push into e-commerce should be welcomed as tech investors favor profitability over growth at any cost. Shmulik said that Ready is getting a unique compensation structure that requires him to financially and mentally buy into the vision of unrealized potential at Pinterest. He will get $20 million in restricted shares if he buys $5 million of Pinterest's common stock within 60 days of coming on board, according to Shmulik.

Barton Crockett, a Rosenblatt Securities analyst, was more mixed on the move in light of Pinterest's recent user-growth issues. In the first quarter of 2021, the company had 478 million monthly active users as people clamored for inspiration amid the epidemic, but since then the count has slipped to 433 million.

Ready has a long history in fintech and e-commerce, which seems to be appropriate for Pinterest's pivot from pure inspiration to e-commerce inspiration, Crockett wrote.