Multiple outlets last week posted stories indicating PayPal was in advanced talks to acquire Pinterest to transform itself into a social commerce powerhouse. On Monday morning, however, PayPal issued a brief statement clarifying that the company is “not pursuing an acquisition of Pinterest at this time.”
At a reported purchase price of $45 billion, the deal would have ranked as the largest transaction in the Internet space over the past decade.
The acquisition was expected to guide PayPal CEO’s Dan Schulman vision of evolving PayPal into a “super app,” akin to China’s Alipay and WeChat that combines social media, commerce and banking.
Pinterest lets users share photos and links to recipes, home-decor and fashion ideas. The advertising-driven platform has been building out its e-commerce push with Product Pins that take shoppers directly to checkout pages at retailers’ websites.
PayPal has made a series of acquisitions, including rewards app Honey Science, the Japanese buy-now, pay later firm, Paidly, and returns specialist Happy Returns, to move beyond its position as e-commerce’s checkout button. Some saw the biggest potential benefit of a merger with Pinterest being access to the data of social platform’s 454 million-strong user base that could allow for targeted advertising.
“This is PayPal’s play to parlay into the exploding social commerce business,” Forrester VP Mike Proulx, told Adweek. “Every social platform is doubling down on native, in-application commerce experiences, recognizing that they’re a fertile territory in the next era of digital commerce.”
Sanjay Sakhrani, at Keefe Bruyette & Woods, said in a note, according to Bloomberg, “We could see how Pinterest could enhance engagement between consumers and merchants with PayPal being a central facilitator in the commerce journey.”
Concerns around the potential deal included overlap with PayPal’s more than 400 million users and integration risk. According to Reuters, JP Morgan’s Tien-tsin Huang wrote in a note, “Running a platform primarily focused on driving user engagement and advertising would require PayPal to use muscles it isn’t accustomed to using.”
Truist’s Andrew Jeffrey in a note, according to Barron’s, saw “little or no strategic rationale” in the merger and believed it “could create conflict w/PayPal’s other large marketplace customers.”
- Response to Market Rumors of Discussions Between PayPal and Pinterest – PayPal
- PayPal Is Exploring a Purchase of Pinterest – Bloomberg
- PayPal Is Said to Be in Talks to Buy Pinterest in $45 Billion Deal – The New York Times
- PayPal Reportedly Eyes $45B Acquisition of Pinterest – Adweek
- PayPal says it is currently not pursuing Pinterest acquisition – Reuters
- Pinterest Stock Spikes on Report of PayPal Buyout Interest. Why It Makes ‘Zero Sense. – Barron’s
- PayPal Is in Talks to Buy Pinterest – The Wall Street Journal
- PayPal Holdings (PYPL) Q2 2021 Earnings Call Transcript – The Motley Fool