According to individuals knowledgeable about the situation, PayPal has made a $45 billion proposal to buy Pinterest. This pairing might lead to other financial technologies and social media tie-ups in e-commerce.
It would be the largest acquisition of a social media company, surpassing Microsoft’s $26.2 billion (roughly Rs. 1,95,990 crore) purchase of LinkedIn in 2016.
The conversations come as online buyers regularly purchase products they view on social networks, frequently watching “influencers” on networks like Instagram and TikTok. PayPal will harness more of that e-commerce development and broaden its income streams by purchasing Pinterest.
According to the ActiveNoon, PayPal has offered $70 (approximately Rs. 5,200) per share, mainly in stock, for Pinterest. According to the informant, the payment processing company aims to reach an agreement and reveal it when it publishes quarterly profits on November 8.
The experts stressed that no agreement guaranteed and that conditions can alter at any time. They requested anonymity because the situation is private.
Did not return requests for a response from PayPal and Pinterest. Bloomberg News initially revealed the talks between the two corporations on Wednesday.
Pinterest is introducing new advertising features to encourage people to shop.
PayPal’s stock dropped 4.9 percent to $258.36. (roughly Rs. 19,330), Pinterest’s stock rose 12.8 percent to $62.68. (roughly Rs. 4,690).
In a remark to investors, Wedbush analysts stated, “(The) mixture will be a major boost for PayPal’s ongoing monetizing proposals on both sides of its vendor and customer systems, particularly if Pinterest’s social commerce framework gets incorporated with Honey’s AI into PayPal’s location platform.”
The payments behemoth benefited greatly from the COVID-19 outbreak, as even more individuals utilized its facilities to shop online and pay bills instead of going out. Its stock has increased by over 36% in the last year, giving it nearly $320 billion (roughly Rs. 23,94,100 crore).
Pinterest goes public in 2019 with a market capitalization of around $13 billion (approximately Rs. 97,275 crores). As a result of the lockout limitations, there was a significant increase in individuals searching for handicrafts and DIY solution suggestions.
Pinterest has cautioned regarding decreasing customer development, particularly in the United States, its biggest market, as the lockdowns have lifted. It has stated that it anticipates revenue development from deeper interaction with current customers rather than from additional signups.
According to Refinitiv Eikon’s valuation criteria, the market has priced Pinterest shares lower than newer social media networks such as Snap but better than more established corporations like Twitter.
According to Eikon, PayPal’s offer marks a 26 percent premium to Pinterest’s Tuesday closing price of $55.58 (approximately Rs. 4,160) and is equivalent to 62 times the social media company’s earnings before interest, taxes, depreciation, and amortization over the previous 12 months.
According to this metric, Microsoft paid 79 times LinkedIn’s earnings in an all-cash transaction. On the other hand, Pinterest would be giving some of PayPal’s equity to its shareholders in the hopes that this currency would rise over time as the merged business reaps revenue and cost benefits.
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