PayPal Holdings Inc is reportedly interested in acquiring Pinterest Inc in a deal worth $45 billion, as the online payments provider aims to tap into the growing trend of collaborations between financial technology and social media companies in the e-commerce realm. With more consumers turning to social media platforms to discover and purchase products, PayPal sees the acquisition of Pinterest as an opportunity to expand its presence in the e-commerce market and diversify its revenue streams through advertising revenue.

According to sources, PayPal has offered $70 per share, predominantly in stock, for Pinterest and hopes to finalize the deal before its quarterly earnings report in November. While no deal is guaranteed at this stage, analysts believe that the potential merger holds significant potential for PayPal’s ongoing monetization efforts.

PayPal’s offer represents a 26% premium to Pinterest’s closing price on Tuesday. The news had a mixed impact on the stock market, with PayPal’s shares declining over 4% while Pinterest’s shares rose over 14%.

Both PayPal and Pinterest have experienced success during the COVID-19 pandemic. PayPal saw a 36% increase in its shares over the past year, reaching a market capitalization of nearly $320 billion, thanks to the surge in online shopping and contactless payments. Pinterest, on the other hand, benefited from users seeking inspiration for crafts and DIY projects while being at home. However, the platform has faced challenges in sustaining user growth, especially in its largest market, the United States.

The potential deal is also complicated by the departure of Pinterest’s co-founder Evan Sharp, who recently announced that he would be stepping down as chief creative officer. This leadership transition adds another layer of uncertainty to Pinterest’s trajectory.

To enhance its e-commerce offerings, PayPal has been actively seeking strategic acquisitions. In 2019, it acquired Honey Science, an online coupon finder, for $4 billion, and earlier this year, it bought Japanese buy-now-pay-later firm Paidy for $2.7 billion. PayPal also expanded its services by acquiring return-service provider Happy Returns in May.

The discussions between PayPal and Pinterest highlight the growing interest of social media platforms and fintech companies in capturing a share of the e-commerce market. Platforms like TikTok are exploring ways to enable users to make purchases directly within the app and have partnered with e-commerce giant Shopify to link product catalogs.

If the PayPal-Pinterest deal comes to fruition, it could have significant implications for both companies and the broader e-commerce landscape. It would signal a major move in the convergence of fintech and social media, allowing PayPal to leverage Pinterest’s platform to drive its e-commerce growth and create new opportunities for monetization.

Useful links:
CNBC article on the potential PayPal-Pinterest acquisition
eMarketer article on the rise of social-driven commerce