Pinterest shares jumped on better-than-expected user numbers even as earnings and revenue missed estimates and the company gave weak guidance for the third quarter.

Activist investor Elliott Management confirmed separately that it’s Pinterest’s top investor and said it has “conviction in the value-creation opportunity” at the company. 

Here’s how the company did.

• Earnings: 11 cents adjusted per share vs. 18 cents per share expected, according to Refinitiv.
• Revenue: $666 million vs. $667 million expected, according to Refinitiv.

Pinterest said global monthly active users declined by 5% from a year earlier to 433 million. While that sort of drop-off is alarming for a social media app that relies on eyeballs to attract advertisers, analysts were expecting a steeper decline to 431 million.

The company’s financials were gloomy, following a trend in the social media market. Facebook parent Meta, Twitter, and Snap all reported second-quarter earnings that missed on the top and bottom lines, and all attributed a weak online advertising market to their bleak results.

More troubling than its second-quarter results was Pinterest’s commentary about what’s expected this quarter. The company said it estimates third-quarter revenue will grow “mid-single digits on a year-over-year percentage basis,” below analysts’ projections for sales growth of 12.7%.

In a letter to investors, Pinterest said economic challenges are leading marketers to reel in spending.

“The macroeconomic environment has created meaningful uncertainty for our advertiser partners,” Pinterest said in the letter.” The company said it saw “lower than expected demand from U.S. big box retailers and mid-market advertisers, who pulled back ad spend due to concerns about weakening consumer demand.”

Pinterest said that its third-quarter guidance takes into account “slightly greater foreign exchange headwinds” than the previous quarter.

In June, Pinterest co-founder Ben Silbermann stepped down as the company’s CEO, and was replaced by Bill Ready, previously the leader of Google’s commerce unit. Pinterest’s hiring of Ready pointed to a deeper push into e-commerce and online retail.

Elliott’s involvement with the company was reported in July by The Wall Street Journal, which said at the time that the firm had built a stake of over 9% in the company. After Pinterest’s results were released on Monday, Elliott confirmed it’s the company’s biggest shareholder and said it’s pleased with Ready’s progress.

“As the market-leading platform at the intersection of social media, search and commerce, Pinterest occupies a unique position in the advertising and shopping ecosystems, and CEO Bill Ready is the right leader to oversee Pinterest’s next phase of growth,” Elliott said in a statement.

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