Pinterest announced plans to lay off less than 15% of its workforce as part of a strategic shift toward artificial intelligence (AI) initiatives. The company also intends to close smaller office spaces related to past acquisitions, with restructuring costs estimated between $35 million and $45 million.
Immediate Action & Core Facts
Pinterest confirmed the job cuts in a securities filing, stating the reductions will be completed by the end of its third quarter in late September. Shares of the company fell nearly 10% following the announcement, reflecting investor concerns over the lack of clear cost savings or a concrete path to AI-driven revenue growth.
The company had 5,205 full-time employees as of September 2023, meaning the cuts could affect up to 780 positions. Pinterest emphasized its commitment to AI-powered products, including the Pinterest Assistant shopping tool and the Performance+ ad suite.
Deeper Dive & Context
Market Competition and Investor Skepticism
Analysts noted that Pinterest’s AI strategy has yet to excite investors, with heightened competition from platforms like TikTok and Meta-owned Facebook and Instagram. Emarketer analyst Jeremy Goldman described the cuts as “more defensive than strategic,” while Danni Hewson of AJ Bell highlighted the pressure on companies to justify AI investments with cost reductions elsewhere.
Broader Industry Trends
Pinterest’s move aligns with broader industry trends, as companies increasingly pivot toward AI. Last week, design software maker Autodesk announced a 7% job cut to redirect investments to AI efforts. Executives at the World Economic Forum’s annual meeting suggested that while AI may displace some jobs, new roles will emerge, though critics argue layoffs are often framed as AI-driven when they are part of broader cost-cutting measures.
Company Rationale and Future Plans
Pinterest stated it is reshaping its sales and marketing strategy to prioritize AI-powered capabilities. The company had more than 4,500 employees globally as of April 2023, according to its most recent proxy filing. The restructuring charges are expected to be recorded in the current fiscal year.