Reddit Plunges, Pinterest Falls, and nVent Drops After Earnings as AI Infra Names Slide

0:02 Bloomberg Audio Studios. Podcasts. Radio. News. The Stock Movers Report. Your roundup of companies making moves in the stock market. Harnessing the power of Bloomberg data. Let's take a look at some of the stocks that are on the move.

0:20 We can do that with Chloe Milley. Earnings reporter for Bloomberg News, she joins us here in studio.

0:23 Chloe, what are you looking at?

0:25 I'm looking at Reddit to start with. So it's not a good day for Reddit. The shares are taking quite the hit this morning because of two things in particular. So first of all, we had a revenue outlook below expectations. And then secondly, we've got this news from Reddit that it is planning to limit access to the forums that it has to essentially get users to make an account.

0:49 The goal of that, of course, is to boost engagement, get a smaller but perhaps more engaged audience, which is a much more valuable resource for advertisers. But then the risk from investors' perspective is that this, of course, may result in lower traffic and a more limited reach. reach for Reddit. So some analysts are saying that this is a long-term strategy that could make sense, but Reddit does have to clear that hurdle. of the near-term pressure that this new strategy could create. This is also happening at the same time as Reddit is also currently negotiating those licensing contracts with big AI companies to avoid having its content scraped. So there's a lot of uncertainty going on for that company at the moment, and the shares are

1:33 taking a bit of a hit as a result.

1:36 I know, Paul, you have Reddit downloaded on your phone. Do you have a login? Do you have like a profile? No. Okay. Nor would I do that. So this is a risky strategy because typically you just aggregate the biggest audience you can and sell against that. But they're saying, let's get a more engaged audience, I guess. And that's where Paul's like, no, I'm good.

1:55 I'm not particularly engaged.

1:56 All right. What's next on your list?

1:58 So, Pinterest is also seeing a little bit of pressure this morning with revenue missing expectations for the third quarter and also quite a subdued outlook. The big challenge for Pinterest is AI disruption and, you know, especially … those AI shopping assistants like Muse that are becoming increasingly popular.

2:20 And then there's also the issue of weaker referral traffic on Google. So the AI overviews on Google are increasingly answering questions about products kind of directly within the search engine rather than linking back to a Pinterest link. And so that reduces traffic, of course, and that means fewer opportunities to monetize that traffic for Pinterest. It's a company that's also been investing in AI itself, you know, trying to make its own AI shopping assistant. But there's been no kind of clear tangible benefit so far. So for now, it mostly means kind of higher spending and margin pressure.

2:57 And so we're seeing a drop in that stock as well this morning. OK, one more. Nvent?

3:03 Yeah, so this is.

3:04 Another story of an AI infrastructure company having a pretty tough time. So it's a company that makes power equipment and cooling equipment for data centers. And it is down this morning because the orders grew far more slowly than the sales, which of course means that growth is kind of slowing down right now for the company. Exactly the kind of thing that investors in AI have been worried about.

3:28 The problem for Envent and other names within that space that we've been talking about recently is that the bar is really just so high. And this season, this earnings season, those companies have really struggled. to clear that bar. So Caterpillar was another one of those examples that we were looking at yesterday with a slight beat on revenue, just not seen as enough for investors and shares also plunging as a result. The only major company that's actually kind of, but that trend has been vertive, but that's because it had to raise guidance and had a beat on every single metric. So it really goes to show just how high the bar is at the moment for those AI infrastructure companies.

4:10 The Stock Movers Report from Bloomberg Radio. Check back with us throughout the day for the latest roundup of companies making news on Wall Street. And for the latest market-moving headlines, listen to Bloomberg Radio Live. Catch us on YouTube, Bloomberg.com, and on Apple CarPlay and Android Auto with the Bloomberg Business app.