Pinterest Inc. is expected to make a deeper push into commerce under its newly named chief executive, a move greeted with some cheers among Wall Street analysts despite a muted stock reaction.
Shares of the company, which helps people collect inspirational ideas from across the internet, were off 1.4% in morning trading Wednesday following Pinterest’s
announcement an afternoon earlier that co-founder Ben Silbermann would be stepping down from the CEO post and replaced by Bill Ready, a veteran of Alphabet Inc.’s
Google and PayPal Holdings Inc.
The stock had been up as much as 11% in after-hours trading Tuesday, according to FactSet data.
“I absolutely believe that Pinterest has the potential to be a 100-year company,” Ready wrote in a LinkedIn post. He added that Pinterest will look to “help people engage more deeply” with what they see on Pinterest, and said that his background in commerce and payments gives him confidence that Pinterest can “build something unique.”
Baird’s Colin Sebastian saw the move as “incrementally positive” for Pinterest’s story.
“We have long highlighted the potential for Pinterest to become a fully functional commerce platform, and recent product development, and leadership changes, suggest this is now a top company priority,” he wrote. While Sebastian expects that “near-term trends are likely to remain choppy” for the company, he sees news of the CEO change “as a positive step toward realizing Pinterest’s potential.”
Bernstein’s Mark Shmulik was also upbeat about the opportunity to make commerce a bigger part of Pinterest’s story.
“This leadership switch comes after a difficult postpandemic period for Pinterest, where user declines and a tricky pivot to creators and commerce have damaged Pinterest’s growth story, compounded by a bearish macro environment,” he wrote. “Especially as tech investors begin favoring profitability over growth at any cost, a material push into e-commerce should be welcomed.”
Further, Shmulik noted that Ready is getting a “unique” compensation structure that “requires him to financially and mentally buy into the vision of unrealized potential at Pinterest.” Beyond “a standard comp package,” he will receive $20 million in restricted shares if he buys $5 million of Pinterest’s common stock within 60 days of coming on board, Shmulik wrote.
Rosenblatt Securities analyst Barton Crockett, however, was more mixed on the move in light of Pinterest’s recent user-growth issues. The company had 478 million monthly active users in the first quarter of 2021 as people clamored for inspiration amid the pandemic, but since then the count has slipped to 433 million.
“Ready has substantial history in fintech and e-commerce, seemingly appropriate for Pinterest’s pivot from pure inspiration to e-commerce inspiration,” Crockett wrote. “But even though Ready’s current Google title is president of Commerce, Payments & Next Billion Users, we see risk that Ready lacks experience growing social media audiences, which is arguably Pinterest’s biggest challenge now.”