Pinterest shares tumbled 6.96% in after-hours trading on Tuesday, despite reporting better-than-expected second-quarter earnings. The sell-off was driven by the company's third-quarter revenue guidance, which pointed to a slowdown in growth amid intensifying competition for digital advertising dollars.

For the second quarter, Pinterest delivered adjusted earnings of $0.43 per share on revenue of $1.18 billion, surpassing analyst estimates of $0.36 and $1.15 billion, respectively. However, the company forecast Q3 revenue in the range of $1.19 billion to $1.21 billion, representing 13% to 15% growth year-over-year—a deceleration from the 18% revenue growth achieved in Q2. The midpoint of the guidance was roughly in line with Wall Street expectations, but the implied slowdown disappointed investors who had priced in stronger momentum heading into the report.

The cautious outlook reflects increasing competitive pressure from larger rivals such as Meta's Instagram, Reddit, and Google, all of which are aggressively expanding their AI-powered advertising tools and visual discovery features. Pinterest's Q2 results also showed a net loss of $46.67 million, partly due to significant share-based compensation expenses, which may have added to investor concerns about profitability.