While Pinterest users continue pinning their dream home makeovers and vacation ideas, the company behind the platform is facing a financial nightmare that has nothing to do with poor design choices. Pinterest’s stock plummeted 21% after reporting disappointing earnings, marking the second-worst trading day in company history. The culprit? Tariffs are forcing retailers to slash their advertising budgets.
Pinterest earned 38 cents per share in the third quarter, missing analyst expectations of 42 cents. Revenue from the US and Canada reached $786 million, falling short of the projected $799 million. CFO Julia Donnelly explained that larger US retailers are facing margin pressure from tariffs and cutting back on ad spending as a result.
Tariffs squeeze retailer margins, forcing major US advertisers to slash Pinterest spending and miss revenue targets.
The timing couldn’t be worse for Pinterest. Home furnishings represent one of the platform’s strongest categories, but this sector is getting hammered by renewed trade policies. When tariffs make imported goods more expensive, furniture retailers have less money to spend on advertising their products. It’s like a domino effect that starts at shipping ports and ends up hitting Pinterest’s bottom line.
The company’s lack of advertiser diversity makes it especially vulnerable to these tariff-driven budget cuts. While Pinterest’s total revenue still grew 17% year-over-year to $1.049 billion, and monthly active users reached 600 million, the outlook remains cloudy. Management forecasts fourth-quarter revenue growth of just 14% to 16%, below Wall Street expectations. This situation highlights the importance of digital transformation for retailers seeking to optimize operations and reduce costs in the face of economic pressures.
The problem extends far beyond Pinterest. Industry experts estimate that tariffs could slash US social media advertising spending by up to $10 billion in 2025. Projections have dropped from $103 billion to $96 billion under moderate tariff scenarios. Major Chinese advertisers like Shein and Temu are already scaling back their budgets.
A recent survey revealed that 94% of US advertisers worry about tariffs affecting their spending plans. Sixty percent expect budget cuts between 6% and 10%, while nearly 25% anticipate reductions up to 20%. Advertising executives have responded to this market volatility with 70% revising their digital ad plans completely. As trade tensions continue, digital advertising platforms may need to find new ways to attract dollars from budget-conscious retailers who are watching every penny.
