On August 4, Pinterest, Inc. (NYSE:PINS) beat Wall Street’s second-quarter targets, then told investors to expect a slower ride ahead. Shares dropped as much as 9% in extended trading anyway. The firm posted adjusted earnings of 43 cents a share, well past the 36 cents analysts had expected. Revenue was $1.18 billion against a $1.15 billion estimate. However, the guidance told a different story: third-quarter revenue of $1.19 billion to $1.21 billion implies growth of just 13% to 15%, a real step down from the 18% pace investors had gotten used to.
Why a Beat Wasn’t Enough to Keep Investors Calm
CEO Bill Ready spent part of the earnings call making a case that stuck with people: He said that any company still ignoring open-source AI models is probably wasting its shareholders’ money. Pinterest is leaning into that idea itself, mixing pricier proprietary models with cheaper open-weight ones through what CFO Julia Donnelly called “model routing infrastructure,” sending the hard stuff to expensive models and routine tasks to cheap ones. Donnelly also explained why growth is slowing: the ad boost from the World Cup won’t repeat next quarter, while European regulators are squeezing the Asian retailers who buy heavily on Pinterest.
Etsy, Inc. (NYSE:ETSY) had its own rough week for a different reason. On August 5, the marketplace beat estimates and raised its full-year sales outlook. The firm then cut 220 jobs, about 12% of its staff, the same day.
Pinterest’s Bull and Bear Case
Pinterest, Inc. (NYSE:PINS)’s user numbers held up well, with monthly actives up 11% to 640 million, ahead of the 635 million analysts wanted. Adjusted EBITDA of $311 million beat both the company’s own guidance and Street estimates of $270 million. CEO Ready’s push into cheap open-source AI could keep a lid on costs even as usage climbs.
However, growth itself is the problem. Revenue is decelerating from 18% down to a guided 13% to 15%. CFO Donnelly warns that European pressure on Asian advertisers could mean this slowdown will last longer than one quarter.
Etsy’s Bull and Bear Case
Etsy, Inc. (NYSE:ETSY)’s numbers actually looked solid. Revenue of $668.3 million cleared the roughly $649 million analysts expected, and the firm raised its full-year gross merchandise sales outlook to mid-single-digit growth from low-single-digit. A fresh $2 billion buyback, funded partly by July’s $1.4 billion Depop sale to eBay, adds to the bull case.
However, a $46.7 million net loss (mostly from the Depop sale) and a 0.4% drop in active buyers compared to last year show a clear problem. This suggests the main marketplace is still not bringing in new customers the way investors want.
Insider Monkey’s Hedge Fund Data
Insider Monkey’s hedge fund database shows both stocks lost some fans heading into this earnings season. Pinterest, Inc. (NYSE:PINS) counted 49 hedge fund holders as of Q1 2026, down from 53 the quarter before. The dollar value hedge funds held in the stock fell from about $1.96 billion to $1.28 billion. Etsy, Inc. (NYSE:ETSY)’s holder count slipped too, from 49 down to 44.
One of Pinterest’s bigger social-platform peers, Meta, actually gained hedge fund interest over the same period, climbing to 262 holders from 256.
Conclusion
Pinterest and Etsy both cleared the bar Wall Street set for them. Neither stock got credit for it. Pinterest’s own cautious outlook and Etsy, Inc. (NYSE:ETSY)’s headline-grabbing layoffs proved louder than the beats themselves, which is a reminder that in this market, meeting expectations isn’t always enough to earn investors’ patience.
Overall, hedge funds were bearish on both stocks, but they sold off Pinterest, Inc. (NYSE:PINS) much more heavily.
While we acknowledge the risk and potential of PINS as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than PINS and that has 10,000% upside potential, check out our report about this cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
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