Pinterest's stock sinks on restructuring plans

Pinterest (PINS) announced in an SEC filing that it is undertaking a board-approved restructuring plan that will focus on redirecting resources toward artificial intelligence, while also slashing its workforce.

The restructuring plan comes as the San Francisco-based social media company's stock has sunk 31.5% over the past 12 months and 41.5% over the last six.

Pinterest said in its filing that it is planning layoffs that will affect "less than 15%" of its workforce and will also be reducing some of its office space. The company added that the reduction in workforce is being done "to support transformation initiatives."

Central to these initiatives will be "prioritizing AI-powered priorities and capabilities," as well as "accelerating the transformation of its sales and go-to-market approach."

The company notes that while it is cutting its workforce "in the near term," it is planning to "reinvest in key development areas and strategic opportunities."

Pinterest had a headcount of 5,205 employees as of its third quarter filing at the end of September.

The company said that it anticipates incurring total pre-tax restructuring charges of approximately $35 million to $45 million, which will be primarily cash-related expenditures.

Digital advertising space gets more cutthroat

Nearly all of Pinterest's revenue comes from digital advertising, which is where it will likely focus its AI efforts. Although the global digital ad spend market size in the US reached $650 billion in 2025 and is expected to be worth about $1.6 trillion by 2035, according to Precedence Research, the competition for advertising dollars is fierce.

The biggest winners in the digital advertising space include Meta Platforms' (META) Facebook and Instagram, Amazon.com, Inc. (AMZN), Google's (GOOG) YouTube and increasingly Reddit (RDDT).

While Pinterest has about 500 million monthly active users (MAU), Facebook brings in over 3 billion MAU, while Reddit has roughly 443.8 million active users each week.

Making things even more challenging for Pinterest is that AI is only accelerating the dominance that the biggest tech companies have in the digital advertising space "to unprecedented levels," as the Wall Street Journal reported.

Meta, Google and Amazon accounted for more than 56% of the US digital ad market in 2025, up from about 51% in 2023, according to advisory and consulting firm Madison and Wall.

“Although we are in the early innings of AI, we are seeing AI accelerating ad growth for these massive platforms” Michael Nathanson, a media analyst at MoffettNathanson, told the Journal.

Malik Ahmed Khan, an equity analyst for Morningstar, noted that Pinterest's strategy is to shift its ad spending from brand awareness to user intent.

"Because the firm is a search and discovery platform, users often provide strong signals to advertisers about their intent to buy certain products," Khan explained.

He pointed out that "we see Pinterest’s investments in artificial intelligence to improve ad-targeting and search results as value-accretive to the firm," but added that "we don’t believe Pinterest has the scale or the capital to compete with larger digital advertising behemoths like Alphabet and Meta."

“However, by leveraging its investments in AI and focusing more on e-commerce, we believe Pinterest can be a credible competitor, worthy of attention from digital advertisers that are seeking to maximize their return on ad spending,” Khan said.

Pinterest said in its SEC filing that it is expected to complete its restructuring plan by the end of its third quarter in September.

The company is scheduled to report its fourth quarter and full year 2025 earnings on February 12.