According to a story posted by Bloomberg on October 20, 2021, PayPal Holdings Inc is considering a $45 billion acquisition of social media startup Pinterest Inc, which may be one of the year’s biggest technical deals. This might help the payments firm achieve its goal of becoming a “super app.”
According to a report published by San Jose, PayPal, based in California, has recently approached Pinterest about a possible partnership. According to a statement made by some people who are aware of the situation but do not want to be identified owing to privacy concerns, the firms have discussed a price of roughly $70 per share, they claimed. Pinterest’s entire firm, including its Class B shares, would be valued at almost $45 billion, representing a 26% premium to the company’s Tuesday closing price.
This acquisition of Pinterest would undoubtedly be PayPal’s largest-ever, surpassing its $4 billion purchase of price-comparison app Honey Science Corp. last year. The company has set its eyes on being a one-stop shop for all things retail and money, similar to China’s Alipay or WeChat, under the leadership of Chief Executive Officer Dan Schulman. PayPal is planning to add a slew of new features to its redesigned app, including high-yield savings accounts, check to cash, and stock investing. With a value of almost $45 billion, the reported deal would make 2021 the busiest year for mergers and acquisitions ever, surpassing 2007’s total.
PayPal’s stock has more than doubled since the beginning of last year, providing the corporation with a strong currency to use for acquisitions. The interest from PayPal comes at a difficult time for Pinterest. This month, Facebook revealed that co-founder Evan Sharp, who managed the company’s design and product teams, is stepping down.
In a note, Ramsey El-Assal, an analyst at Barclays Plc, wrote that the transaction would be a “huge swing for PayPal, and would constitute a major foray into the advertising business.”
According to the sources, the terms of a sale could change, and there’s no certainty that the talks would result in a contract. A spokeswoman for PayPal did not respond to a request for comment, and a spokesperson for Pinterest was unavailable to comment right away.
PayPal anticipates the number of active users on its huge platform to rise to 750 million by the end of 2025, up from 403 million now, thanks to planned enhancements aimed at making it the world’s next super app. If Schulman succeeds, the company, like Facebook Inc. and Amazon.com Inc., may become an even more important aspect of people’s lives.
What is Pinterest?
Pinterest is a visual search and scrapbooking tool that allows users to save, collect and organise images into groups based on themes. Advertisers flocked to social media sites in the early days of the pandemic to capture a captive audience that supported the move to e-commerce. Pinterest has been releasing additional tools to assist producers in making their “pins” shoppable, establishing a more direct link between content on the site and online sales.
Purchasing Pinterest would put PayPal in the difficult and expensive business of screening out bad content submitted by users, a problem that all of the big social media companies, including Facebook, face. Pinterest restricted ads containing weight-loss images and language earlier this year to prevent content that could encourage bad eating habits; in the past, the firm has had to take steps to combat the spread of vaccine misinformation.
Pinterest is similarly adjusting to a post-pandemic drop in traffic. In July, the company’s stock plunged after it announced fewer monthly active users than experts had projected, a critical indicator for social media companies. “If PayPal buys Pinterest, the fintech company obtains a social media presence rivalling Instagram, bringing in highly engaged people and helping merchants sell things,” according to Bloomberg Intelligence. Pinterest has 380 million monthly active users who use the app 37 times per month, while PayPal has 80 million monthly active users who use the app 8-9 times per month.” PayPal’s hunger for acquisitions has grown in recent years as the company has acquired competitors and expanded into new areas.