Pinterest (NYSE:PINS) stock is down slightly today on news that the social media company’s long-time CEO Ben Silbermann is stepping down.
The San Francisco-based company said that Silbermann will be replaced by former Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) executive Bill Ready. The change in the CEO role comes as Pinterest moves to focus on a new e-commerce strategy and transition away from its advertising-based business model.
Prior to today, PINS stock had fallen 45% this year.
What Happened With PINS Stock
Silbermann had been CEO of Pinterest since he co-founded the company back in 2010. The company said he will transition to the new role of executive chairman and keep his board seat at Pinterest. Bill Ready becomes only the second person to lead Pinterest. He previously ran commerce and payment operations at Google and also held senior roles at PayPal (NASDAQ:PYPL).
Pinterest has more than 430 million monthly active users. The company thrived during the pandemic when people were locked down at home, and, in 2021, it reported $316 million in profit on revenue of $2.6 billion.
However, the company has struggled over the last year and its share price has declined amid concerns that growth is slowing at the company coming out of the Covid-19 crisis.
Why It Matters
A new CEO and strategy that focuses on e-commerce might help Pinterest to better monetize its business and provides a fresh start to the company. The new direction could also help to boost PINS stock, which now trades only slightly above its initial public offering (IPO) price of $19 a share. Over the past year, Pinterest has been hit with accusations of racial and gender inequality. Several current and former executives of the company also sued Pinterest alleging discrimination and breach of contract.
At the same time, Pinterest has also lost users and seen growth slow. Its revenue growth has slowed now for three consecutive quarters. In the third and fourth quarters of last year, revenue increased by 43% and 20% year over year. In this year’s first quarter, Pinterest’s revenue increased by only 18%. Earlier this month, Pinterest announced that it is buying The Yes, a shopping platform for fashion brands in a sign of its growing push into e-commerce. The value of that acquisition was not disclosed.
What’s Next for Pinterest
Investors clearly see the leadership change at Pinterest as a positive development. With his experience, Bill Ready could help the company successfully execute on its new e-commerce strategy. However, the proof will be in the pudding. Ready will need to not only move Pinterest further into e-commerce and away from advertising, but also boost Pinterest’s earnings and share price. A tall order.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.