Shares of Pinterest (NYSE: PINS) were sent soaring on Wednesday, after news broke that PayPal (NASDAQ: PYPL) may be looking to purchase the social media company in an effort to expand its growing e-commerce empire.
According to Bloomberg, which cited people familiar with the matter, PayPal has recently reached out to Pinterest regarding a potential acquisition of the social media company, with a rumoured price tag of around $70 per share. If materialized, the deal would give Pinterest a valuation of approximately $45 billion, and would amount to a premium of at least 26% on the company’s closing price of around $55 per share as of Tuesday.
PayPal’s motivation behind the apparent move is being fuelled by aspirations to become a fully-integrated e-commerce platform. The company has recently enjoyed a historical boom in online shopping, as the Covid-19 pandemic kept consumers succumbed to their computer screens rather than brick-and-mortar retailers. PayPal’s stock has more than doubled since the beginning of 2021, with its market cap sitting at nearly $320 billion.
The move also comes at a difficult time for Pinterest, which has recently faced an onslaught of accusations from former employees alleging that the social media company was discriminating against its female workers. To make matters worse, Pinterest’s co-founder, Evan Sharp, whom was overlooking the company’s design and product teams, is also planning abdicate his position.
To make matters worse, Pinterest revealed that its monthly active users missed second quarter estimates, and that going forward, the company foresees an absence of visibility on major engagement drivers. According to its second quarter earnings, the company saw its monthly active users fall from a record of 478 million in the prior quarter to only 454 million.
Following the news, shares of Pinterest were sent soaring to around $62.68 at the time of writing on Wednesday, while PayPal’s stock slumped by more than 5%.
Information for this briefing was found via Bloomberg and Pinterest. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.