PayPal (PYPL) plans to acquire digital pinboard site Pinterest (PINS) for $45 billion. Citing people familiar with the matter, Reuters reports that the online payments provider has offered $70 per share, mostly in stock. A deal could be announced as early as November 8, when PayPal reports its quarterly results. PYPL shares fell 4.91% to close at $258.36 on October 20.
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PayPal is a U.S.-based technology platform that enables digital and mobile payments. Its payment solutions include PayPal, PayPal Credit, Braintree, and Venmo.
The $70 a share offer represents a 26% premium to PINS closing price of $55.58 on October 19, 2021. It is also equivalent to 62 times the company’s EBITDA over the last 12 months. The proposed $45 billion deal will be the biggest acquisition of a social media company, surpassing the $26.2 billion that Microsoft (MSFT) paid for LinkedIn in 2016.
The acquisition should allow PayPal to merge financial technology with social media in e-commerce. Additionally, it comes at a time when online shoppers are increasingly buying items they see on social networks, where Pinterest is a big player. (See Top Smart Score Stocks on TipRanks)
Consequently, PayPal should be able to capture a good number of e-commerce customers via social media and diversify its income stream even further through advertising revenue. A Pinterest acquisition would be a step in the right direction, as PayPal continues to explore ways of monetizing merchant and consumer platforms.
The online payment giant has recently completed a string of acquisitions as it looks to bolster its e-commerce offerings. It bought Honey Science for $4 billion in 2019 and Paidy for $2.7 billion earlier this year.
Recently, Bank of America Securities analyst Jason Kupferberg reiterated a Buy rating with a $323 price target, implying 25.02% upside potential to current levels.
Consensus among analysts is a Strong Buy based on 21 Buys, and 3 Holds. The average PayPal price target of $336.62 implies 30.29% upside potential to current levels.
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