- Pinterest shares rose 19% in Tuesday's premarket despite disappointing earnings.
- Activist investor Elliott Management confirmed it holds a 9% stake in the company, triggering the rally.
- "Our conviction in the value-creation opportunity at Pinterest today has led us to become the company's largest investor," Elliott said.
Pinterest rallied before the opening bell Tuesday after activist investment firm Elliott Management confirmed that it is now the image sharing app's largest shareholder.
The stock climbed 19% to trade at $23.80 in early-morning trading after Elliott confirmed that it has built up a 9% stake in Pinterest, as previously reported by the Wall Street Journal.
"Pinterest is a highly strategic business with significant potential for growth," Elliott's managing partner Jesse Cohn and senior portfolio manager Marc Steinberg said. "Our conviction in the value-creation opportunity at Pinterest today has led us to become the company's largest investor."
Pinterest shares gained in spite of a gloomy earnings report.
The company said Monday that it had missed its earnings-per-share target of 18 cents a share, and that its global monthly active users had declined 5% to 433 million over the past year.
But investors appear to have looked past those disappointments, instead betting on Elliott's track record as an activist investor.
"As the market-leading platform at the intersection of social media, search and commerce, Pinterest occupies a unique position in the advertising and shopping ecosystems," Cohn and Steinberg said. "CEO Bill Ready is the right leader to oversee Pinterest's next phase of growth."