PayPal is considering buying Pinterest

It’s interesting to see social media companies merge with payment companies. The payment company values it around $45B that’s around 70$ a share including the value of its untraded B shares, Bloomberg said. Though it is uncertain that the talks will lead to a deal. Many investors celebrated the rise of the stock often reporting it to be undervalued and seeing a huge potential to perform – Similar is the case with PayPal it seems for now.

Here’s how analysts reacted:

If the report is true, Truist analyst Andrew Jeffrey said it “makes zero sense,” and would accentuate Truist’s concerns about the durability of PayPal’s revenue growth. Moreover, he saw the move as “an act of near desperation” as PayPal grappled with more competition and lagging Venmo monetization.

The acquisition of Pinterest (PINS) could increase risk as it could create a conflict with PayPal’s (PYPL) other large marketplace customers, Jeffrey added.

Paypal’s (PYPL) annual guidance is for 52-55M net new active accounts, NNAs, in fiscal 2021 and acquiring Pinterest (PINS) may hint at concerns hitting guidance and a slowdown in net additions in the second half of the year, Mizuho says, according to Hammerstone Markets.

Mizuho analyst Dan Dolev agreed that the acquisition could present another way for PayPal to “delve deeper” into the internet or e-commerce. The acquisition would also add some of Pinterest’s 450 million active users to PayPal’s current 400 million.

But Dolev expressed concerns over the extent of the pre-existing overlap there was between the two companies’ user bases. He also pointed out that the social media site’s dropping user count could pose a problem.

With mixed feelings and the stock is said to be undervalued, is the acquisition fruitful or PayPal isn’t the company for Pinterest? Thoughts?

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Update:

PayPal said it isn’t pursuing an acquisition of digital pinboard site Pinterest “at this time,” following reports it was in discussions.

PayPal Holdings, Inc. - Response to Market Rumors of Discussions Between PayPal and Pinterest (pypl.com)

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