By Yuvraj Malik
(Reuters) -Activist investor Elliott Investment Management disclosed on Monday it had become the largest shareholder in Pinterest (NYSE:PINS) Inc, backing the management of the digital pin-board firm and sending the company's shares up 21%.
Pinterest has "significant potential for growth", which led Elliott to become its largest shareholder, Elliott managing partner Jesse Cohn and senior portfolio manager Marc Steinberg said in a statement.
Elliott did not disclose its stake in Pinterest. However, the Wall Street Journal reported in July that the investment firm had amassed a more than 9% stake. (https://reut.rs/3zp1smr)
The firm on Monday backed Pinterest Chief Executive Bill Ready, who took over on June 29, and also commended co-founder Ben Silbermann for the leadership transition.
Elliott and the Pinterest management had "a very collaborative and engaged dialogue" recently, Ready said on a post-earnings conference call.
"As a visual search engine, Pinterest offers a distinct way for businesses to market. I think Elliott may be on to something here," said Michael Schulman, chief investment officer at Running Point Capital.
Elliott has also been building up stake in PayPal Holdings Inc (NASDAQ:PYPL), Bloomberg News has reported (https://reut.rs/3QcHXnL), and has previously bought stakes in companies including eBay (NASDAQ:EBAY) inc, Twitter Inc (NYSE:TWTR) and AT&T Inc (NYSE:T).
Pinterest's shares were up at $24.36 after the bell on Monday, still way off their record high of $89.90 hit in February 2021, when people, cooped up at home during the pandemic, thronged the company for inspiration for projects.
The statement from Elliott came as Pinterest reported a lower-than-expected profit due to higher costs and users spending less time on its platform.
Like its peers, Pinterest has suffered from advertisers cutting back on budgets in response to increasing costs and recession fears.
The company saw weakness from advertisers in the consumer packaged goods category, big-box retailers and mid-market advertisers, finance chief Todd Morgenfeld said, adding that the digital advertising environment will continue to be challenging.
The company said it expected revenue growth of mid single-digit percentage in the current quarter, crimped by the impact of a stronger dollar.