PayPal Holdings Inc (NASDAQ: PYPL) could acquire Pinterest in a deal that values the social networking service at about $39 billion, Bloomberg said in a report on Wednesday.
The payments giant is willing to pay $70 a share for the blockbuster acquisition. Shares of Pinterest Inc (NYSE: PINS) jumped nearly 15% to $63.50 this afternoon.
What the acquisition means for PayPal
According to MoffettNathanson’s Lisa Ellis, PayPal’s bid for Pinterest might be a response to Square Inc that recently moved to buy Australia’s Afterpay. On CNBC’s “The Exchange”, she said:
Afterpay is known as a BNPL financing company, but their real differentiation is the marketing and shopping services for consumers, and if PayPal ends up going ahead with this acquisition, it’ll bring a lot more commerce and shopping discovery content into the PayPal ecosystem.
Ellis has a “buy” rating on PYPL with a price target of $350 that represents an over 35% upside from here.
Why are fintech firms buying social commerce platforms?
During the same interview, The Verge’s Alex Heath said the social commerce platforms are suddenly on the radar for fintech firms because of the changing advertising landscape.
The advertising technology is being rewritten. It’s getting harder for companies to track purchases and conversions across other companies. Consolidating social commerce under one umbrella makes that data usable for conversions or proving the efficacy of advertising. It’s incredibly valuable and will get more valuable in the future.
Both PayPal and Pinterest are yet to make an official comment on the news.
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