PayPal is reportedly negotiating to purchase social media group Pinterest for almost $45 billion.
If the online payments company successfully acquire Pinterest, it would be one of the largest corporate takeover deals of 2021.
Both the companies have declined to comment on the reports.
However, as the news of acquisition surfaced, Pinterest’s shares climbed over 13 per cent to $63.31. The group gained a market capitalisation of over $40 billion with the jump of share price. Pinterest’s shares have almost trebled since its stock market debut in April 2019.
PayPal has apparently proposed the San Francisco-based company $70 a share offer. However, PayPal’s stock tumbled more than 5 per cent.
With the aim to join popular financial service, PayPal has recently purchased Japan’s company, Paidy for $2.7 billion. The company has been using its convincing stock price to support its acquisition strategy to become a super app, which would be able to offer payments and also act as a social media platform.
During the pandemic when people are preferring to work and shop online, Pinterest’s business boosted initially, but the company couldn’t maintain the momentum. In July, the company’s earnings report couldn’t meet expectations of Wall Street as it lost $8 billion from its market value in a single day.
However, despite fluctuations in Pinterest’s business, some analysts see the acquisition optimistic.
According to Wedbush analyst Moshe Katri, it would be a good deal for PayPal and despite market speculations, it could be a game changer.
Katri was of the view that Pinterest already has a partnership with Shopify and it wouldn’t be its first deal. However, its partnership with PayPal would make strategic sense, he added.
Katri said that it’s estimated social commerce could grow from $26.8 billion last year to $52.5 billion in the next two years.
Colin Sebastian, a research analyst at Baird, said Pinterest’s more than 450 million monthly users want to purchase products online and PayPal would be the best platform for them.
Sebastian added that digital marketing is an underappreciated part of PayPal’s plans and this potential deal could propel PayPal into one of the leading digital marketing platforms.