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As more and more Internet shoppers buy the goods they see on social media sites such as TikTok and Instagram, deal negotiations will follow.
According to people familiar with the matter, PayPal Holdings Inc has proposed to acquire digital board site Pinterest Inc for $45 billion. This merger may indicate that fintech and social media companies will cooperate more closely in the field of e-commerce.
The deal negotiations revealed on Wednesday were about “influencers” on platforms such as Instagram and TikTok as Internet shoppers were increasingly buying the goods they saw on social media. The acquisition of Pinterest will allow PayPal to gain more e-commerce growth and diversify its revenue through advertising revenue.
One of the sources said that PayPal was bidding $70 for Pinterest, most of which were stocks. The source added that the online payment provider hopes to successfully negotiate and announce the deal when it announces its quarterly earnings on November 8.
The source warned that no deal is certain and the terms may change. They asked not to be named because the matter was classified.
PayPal and Pinterest did not respond to requests for comment. Bloomberg News first reported on the PayPal-Pinterest meeting on Wednesday.
PayPal’s offer is a 26% premium to Pinterest’s closing price of $55.58 on Tuesday. Affected by this news, PayPal’s stock price fell more than 4%, while Pinterest rose more than 14% to $63.51.
“[The] Wedbush analysts wrote in a report that the merger will have a significant positive impact on PayPal’s ongoing monetization plans on both its merchant and consumer platforms, especially if Pinterest’s social commerce platform and Honey’s AI are integrated into PayPal’s Destination application.
This payment giant is one of the big winners of the COVID-19 pandemic as more and more people use its service to shop online and pay bills to avoid going out. Its stock price has risen about 36% in the past 12 months, and its market value is close to US$320 billion.
Pinterest also found a surge in users looking for ideas for crafts and DIY projects because of blockade restrictions that keep people at home.
As the blockade eased, Pinterest warned of slowing user growth, especially in the United States, its largest market.
Pinterest was valued at approximately $13 billion when it went public in 2019.
After co-founder Evan Sharp announced last week that he would resign as chief creative officer to join LoveFrom, a company led by Apple’s designer of many products, Jony Ive, the company Is at a crossroads.
Sharp co-founded an online scrapbook and photo-sharing platform with Ben Silbermann, CEO of the company based in San Francisco, California, and Paul Sciarra, who left in 2012.
In recent years, PayPal has been seeking to upgrade its e-commerce products through acquisitions. It acquired online coupon search company Honey Science for US$4 billion in 2019, and it acquired Paidy, a Japanese buy-and-pay (BNPL) company, for US$2.7 billion earlier this year. It acquired Happy Returns, a return service provider, in May.
Social media driven business
Social media platforms that are not seeking to merge with fintech companies have been trying to get consumers to buy directly from their platforms.
For example, TikTok is testing a way for users to purchase products directly on its short video app. It has partnered with e-commerce giant Shopify and started allowing retail brands to link their product catalogs to the app in August.
Analysts said that the PayPal-Pinterest deal negotiations highlight the potential of other social media and financial technology companies to join forces to occupy the e-commerce market.
“Social/interactive commerce is growing in the United States, but no one has won it yet. Therefore, PayPal is not against Amazon, but is betting on a different shopping model,” said Joe Kaziukėnas, e-commerce analyst at Marketplace Pulse.
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