PayPal Wants To Buy Pinterest For $45 Billion
offered PayPal buys Pinterest for $45 billion, a combination that could herald more fintech and social networking in e-commerce.
It is the largest acquisition by a social media company, surpassing Microsoft’s $26.2 billion purchase of LinkedIn in 2016.
The deal talks come as online shoppers are increasingly buying items they see on social media.
They often follow influencers on platforms such as Instagram and Tik Tok. Acquiring Pinterest allows PayPal to capture more e-commerce growth and diversify its income through advertising revenue.
The online payments provider hopes to successfully negotiate and announce the deal by the time it announces its quarterly earnings on November 8.
This integration is hugely positive for PayPal’s ongoing monetization initiatives on both the merchant and consumer platforms sides, especially if Pinterest’s social commerce platform is integrated with Honey’s AI in the PayPal destination app.
The payments giant has been among the big winners in the coronavirus pandemic, as more people use its services to shop online and pay bills. Its shares have risen about 36 percent in the past 12 months, giving it a market capitalization of nearly $320 billion.
Pinterest was valued at around $13 billion when it went public in 2019. It has also seen a spike in users looking for crafts and project ideas, as lockdown restrictions keep people at home.
With the easing of the lockdown, Pinterest warned of slowing user growth, especially in the United States, its largest market. It said it expects revenue growth primarily through deeper engagement with existing users rather than by signing up new users.
Read also: PayPal launches a comprehensive application to provide financial instruments
PayPal looks to boost e-commerce offerings
PayPal’s offer represents a 26 percent premium to Pinterest’s closing price of $55.58, which is 62 times the social media company’s EBITDA over the past 12 months.
By this metric, Microsoft paid 79 times LinkedIn’s earnings when it got it in an all-cash deal. However, Pinterest gives its shareholders some of the PayPal shares.
The payments giant has been looking to boost its e-commerce offerings in recent years through acquisitions.
Online coupon finder Honey was bought in 2019 for $4 billion. It also bought Japan’s Paidy for $2.7 billion earlier this year. It acquired return service provider Happy Returns in May.
Social media platforms are working through ways to allow consumers to purchase directly from their platforms. TikTok, for example, is testing a way to buy products directly through its app.
TikTok has partnered with e-commerce giant Shopify. It began in August by allowing retail brands to link their product listings to the app.
PayPal’s deal with Pinterest highlights the potential of social media and other fintech companies to join forces to capture segments of the e-commerce market.
Social commerce is growing in the United States and no one has won it yet. So instead of taking on Amazon, PayPal is betting on a different kind of shopping model.
