PayPal is close to taking over the visual discovery engine Pinterest. According to Bloomberg, the deal, which offers the fintech giant a way to venture into social commerce, could be valued at $45 billion. PayPal is reportedly in the final stages of talks to acquire image-sharing social media platform Pinterest.
According to unnamed Bloomberg sources, the deal to take over Pinterest is touted to be somewhere along the lines of $70 per share, taking the total value to an astounding $45 billion.
This is higher than the $33.95 billion value the visual bookmarking service vendor attained on Wednesday after a 12.77% rally when the news broke out. On the flip side, the benefits of the deal weren’t quite clear to the shareholders of the digital payments company, as evidenced by a 5.36% fall in its share price on Wednesday.
Taking over Pinterest gives PayPal, which has been eyeing businesses outside its core area of expertise recently, a way to expand into advertising. The acquisition also underlines PayPal’s e-commerce ambitions, for which Pinterest offers a huge potential thanks to its 454 million monthly active users (MAU).
At an investor conference in September, PayPal CEO Dan Schulman said, “We have a huge road map around shopping toolsets.” The acquisition of Pinterest is possibly one of the steps of the PayPal roadmap, along with the $2.7 billion Japanese buy-now-pay-later services Paidy, $4 billion coupon finder and consumer buying data provider Honey Science, etc.
Where Pinterest fits into PayPal’s strategy remains to be seen. Pinterest basically sells ads based on images shared or pinned by its users, under any of the topics the platform offers. Going forward, the digital scrapbooking platform will find a way to bolster the shopping experience through user pins, much like Facebook did with the ‘Shop’ tab on Instagram.
It isn’t a stretch to speculate that PayPal may be looking to tie up its fintech; buy now, pay later services with visual shopping experiences. The company is essentially fusing e-commerce, banking, and now social media to deliver social commerce on a super app on par with some of the other players such as Paytm, Alipay, Grab, etc.
Dan Dolev, senior analyst at fintech equity research firm Mizuho wrote, “The key value proposition for PayPal would be to have an anchor on the internet and/or e-commerce and social media, which helps diversify away from standard online checkout.” But that’s not all.
Dolev added. “Down the road, PayPal could potentially add more shopping capabilities, and boost its e-commerce presence, potentially competing with other large online retailers like Amazon and Shopify.” Besides losing its co-founder and chief design and creative officer Evan Sharp this month, the company is also dealing with allegations by former female employees, accusing Pinterest of discrimination.
Pinterest witnessed a decline in Q2 2021, with MAUs declining just over 5%. This coincides with a decrease in its share price from a 12-month high of $89.90, which suggests $70 may be a good deal for PayPal. If agreed upon, PayPal’s acquisition of Pinterest would be the fintech company as well as 2021’s largest acquisition.
