WSJ News Exclusive | Elliott Sets Sights on Pinterest

It has been a time of turmoil for Pinterest, which operates a free online platform for sharing images that inspire projects such as planning weddings, completing home renovations and creating recipes.

In June,

Ben Silbermann

stepped down as chief executive, becoming executive chairman. The company named

Bill Ready,

who had been president of commerce at

Alphabet Inc.’s

Google since 2020, as his replacement.

The moves came after several Pinterest executives departed in recent months, including its head of global business operations and its investor-relations chief.

Mr. Silbermann, one of three Pinterest co-founders, has a roughly 37% voting stake in the company, according to its latest proxy filing from April, which could limit Elliott’s ability to force changes.

Pinterest’s business grew dramatically during the pandemic, and in February, the company reported its first full-year profit and more than $2 billion in annual revenue. But while revenue grew 18% in the quarter that ended in March from a year earlier, global active monthly users fell 9% and the company posted a net loss of $5 million, as Covid restrictions eased and people began spending more time offline. Changes to

Apple Inc.’s

privacy rules and a slowdown in ad spending also weighed in on the company’s results.

Shares in Pinterest, which has a market valuation of about $12 billion, are down around 50% year-to-date, worse than the tech-heavy Nasdaq Composite Index, which has fallen by about 30%. The company went public in early 2019 at $19 a share; the stock surged above $80 last year but is now below the IPO price, trading at $17.43 Thursday afternoon.

In recent years, Pinterest has been looking to boost revenue beyond its advertising-centric model by expanding into e-commerce. The company partnered with

Shopify Inc.

in 2020, giving its users the ability to purchase products they find on its platform by clicking on a link to a merchant’s website. In June, Pinterest acquired the Yes, an artificial-intelligence platform that customizes the fashion-shopping experience for users.

Pinterest faces challenges in this area, though, as online consumer spending has lately been on the decline, and the tech sector has been grappling with the combined weight of macroeconomic factors such as rising interest rates, the war in Ukraine and growing inflation, which have weakened the online ad market.

Last year,

PayPal Holdings Inc.

was in talks to buy Pinterest but backed out after the payments company’s shareholders balked.

Elliott is known as one of Wall Street’s toughest activist investors, with a history of taking on tech companies and others and forcing changes such as sales or executive shake-ups.

Last year,

Twitter Inc.

co-founder

Jack Dorsey

stepped down from the top job after facing pressure from Elliott. The activist took a roughly $1 billion stake in Twitter in 2020 and later reached an agreement to appoint two new members to what was an eight-person board.

In 2019, Elliott and fellow activist Starboard Value LP criticized the performance of online marketplace

eBay Inc.

Elliott’s

Jesse Cohn

was among three members added to eBay’s board. Six months later, Chief Executive

Devin Wenig

resigned.

Elliott, with more than $50 billion under management as of the end of last year, also has a private-equity arm, Evergreen Coast Capital, that sometimes bids on companies that are targets of the firm’s activist campaigns.

Write to Sarah E. Needleman at [email protected]