Following a report from Bloomberg that PayPal (NASDAQ: PYPL) is in advanced stages to acquire Pinterest (NYSE: PINS) for approximately $45 billion, each companies’ investors experienced polar opposite reactions.
As Pinterest’s share price soars, PayPal found itself falling 5%, but what does all this mean for investors?
Why is Pinterest rising and PayPal dropping?
It’s all a matter of perspective, isn’t it?
To many — not all — Pinterest investors, this is a pretty sweet deal. It would work out at approximately $70 per share, compared to its closing price yesterday of $62.68. The sale goes through, many investors nab a quick buck, cool.
As for PayPal, a $300 billion+ company, spending $45 billion on a social media/e-commerce platform is a big bet. Should things go south and the deal not pay off in a big way, PayPal’s investors could panic and abandon ship.
But why would either party actually want the biggest consumer internet deal in history to take place?
For PayPal, heightened competition in the payment space from the likes of Shopify, Affirm, and even Facebook has forced the need for innovation. But why innovate, when you could just buy a social media company that already has an established e-commerce system, as well as close to half a billion users?
Pinterest is less obvious. Having gone public in 2019, the stock has jumped more than 150% since and is widely viewed as ‘the good guy’ in social media — not a high bar, to be fair. There is a lot of runway still to grow, and it would be a shame if it were to be acquired.
Though this is all just speculation right now, as the old adage goes: “where there’s smoke, there’s a fire”, so best keep an eye on this one.
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Editor at MyWallSt
Jamie is the Content Editor here at MyWallSt. His favorite stock is Apple, which is also the first stock he ever bought. Jamie is not only a big fan of its products, but he believes that the tech giant has a whole lot more to give the world, and hasn't even scraped the surface of its potential.