PayPal Holdings Inc has offered to buy digital pinboard site Pinterest Inc for $45 billion, reported news agency Reuters and Bloomberg citing people familiar with the matter. If company succeeds, it would be the biggest social media acquisition since Microsoft bought LinkedIn for $26.2 billion in 2016.
Online buyers are increasingly buying products they see on social media, often following “influencers” on Instagram and TikTok. PayPal would be able to capture more e-commerce growth and diversify its revenue streams by acquiring Pinterest, Reuters reported explained.
Citing a source, the agencies reported that PayPal has offered $70 per share, largely in stock, for Pinterest. The online payments company aims to negotiate and announce an agreement by November 8.
The report said no deal was certain and terms could alter. They requested anonymity because the topic is private. PayPal and Pinterest declined to comment. The conversations were initially reported by Bloomberg on Wednesday.
In contrast, Pinterest shares soared 12.8 per cent to $62.68. Wedbush analysts said the combination would be a “major boost for PayPal's ongoing monetization strategies on both sides of its merchant and customer platforms.”
During the COVID-19 pandemic, more people utilised PayPal to purchase online and pay bills instead of going out. Its stock has grown 36% in the last year, giving it a market valuation of about $320 billion.
Pinterest went public in 2019 with a $13 billion valuation. Customers seeking creative and DIY ideas soared as tight curbs kept people at home. Pinterest has warned of declining user growth, particularly in the US, its largest market. It expects revenue growth from stronger interaction with existing users rather than new sign-ups.
According to Refinitiv Eikon valuation metrics, the Pinterest stock is priced lower than certain newer social media platforms like Snap Inc, but more than more mature corporations like Twitter Inc. According to Eikon, PayPal's offer is equivalent to 62 times Pinterest's 12-month earnings before interest, taxes, depreciation, and amortisation.
Microsoft spent 79 times LinkedIn's earnings when it bought it outright. Pinterest, however, will be offering its stockholders a piece of PayPal's equity in exchange for revenue and cost efficiencies. Pinterest is in flux after co-founder Evan Sharp revealed last week he would leave as CCO to join LoveFrom, a startup helmed by Apple Inc. designer Jony Ive.
Sharp co-founded the online scrapbooking and photo-sharing platform with Ben Silbermann, CEO, and Paul Sciarra, who left in 2012. PayPal has been looking to acquire e-commerce businesses in recent years. It paid $4 billion for online coupon finder Honey Science in 2019 and $2.7 billion for Japanese BNPL business Paidy earlier this year. In May, it bought Happy Returns.
Those social media companies that haven't merged with financial firms are looking for methods to let users buy directly from them. TikTok, for example, is trying a product purchase feature on its short video app. In August, it began allowing retail firms to link their product catalogues to the app via Shopify.
Analysts say the PayPal-Pinterest negotiations show how other social media and fintech businesses can work together to win e-commerce market share.