[Editors’ Note: Since the posting of this story, PayPal has denied the many rumors about a purchase of PayPal, saying in a statement on its website, “In response to market rumors regarding a potential acquisition of Pinterest by PayPal, PayPal stated that it is not pursuing an acquisition of Pinterest at this time.”]
PayPal is reportedly in talks to acquire Pinterest, according to media outlets including The New York Times, Financial Times, Bloomberg and CNBC. Bloomberg’s sources said that PayPal is looking at a potential price of approximately $70 a share, which would value Pinterest at around $45 billion.
If the rumors are true, the deal should be announced in the very near future: sources told Reuters that PayPal hopes to successfully negotiate and announce a deal in time for its quarterly earnings report on Nov. 8. The sources also noted that no deal was certain and that its terms could change.
Multiple analysts have commented on how the deal could benefit PayPal. The payments provider has worked to stay at the cutting edge of relevant trends, including the buy now, pay later (BNPL) services that are currently experiencing massive growth and are expected to surge during the holidays. Adding social media capabilities could further enhance PayPal’s offerings for retailers.
“We see how it can make sense for the company,” said Sanjay Sakhrani, Analyst at Keefe Bruyette & Woods in a note to clients seen by Bloomberg. “We could see how Pinterest could enhance engagement between consumers and merchants with PayPal being a central facilitator in the commerce journey, thereby feeding into the company’s vision of being a super app.”
Social Commerce Adds Synergies, but PayPal Must Integrate Them Correctly
Shoppers are warming up to social commerce, but their biggest concerns are about security: 43% of consumers said they don’t trust social media platforms to manage the payment process, according to a study by CouponFollow. Putting an established payments company like PayPal behind a social commerce-focused program like Pinterest’s shoppable pins could provide what it takes to bring consumer adoption to the next level.
The deal also could create synergies with some of PayPal’s earlier acquisitions. The payments platform acquired deal-finding platform Honey Science Corp. for $4 billion in November 2019. Honey is a discovery tool that helps shoppers track retailer prices when searching for items online, which could pair well with Pinterest-inspired purchases.
Pinterest noted that its visitors usually arrive with ideas, but they don’t necessarily know what they’re looking for yet: 97% of searches on Pinterest are unbranded, according to the social media platform’s presentation at NRF Converge. Providing shoppers with both inspiration and help finding the best deal to make that idea a reality could be a powerful tool for consumers.
“[The] combination would be a significant positive for PayPal’s ongoing monetization initiatives on both sides of its merchant and consumer platforms, especially if Pinterest’s social commerce platform gets integrated with Honey’s AI into PayPal’s destination app,” said Wedbush analysts in a note seen by Reuters.
However, not every analyst is convinced that the acquisition would be right for Pinterest. Harshita Rawat, an analyst at Sanford C. Bernstein & Co., noted that PayPal took nearly two years to integrate Honey’s offerings with its own capabilities. It would be one thing to purchase Pinterest, but another task entirely to not just integrate it into the PayPal app but to take full advantage of the new opportunities.
“One can argue that if PayPal solves commerce (via Honey and Pinterest) along with financial services (which it is trying to do with their new app rollout), PayPal will be unassailable in its super-app quest. We are, however, cautious,” said Rawat in a note to clients seen by Bloomberg. “PayPal, in our view, has had a very mixed track record of deals.”