Pinterest stock jumps after PayPal said to explore acquisition - Bloomberg (updated)

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• Pinterest (NYSE:PINS) stock surges 9.4% after a report that PayPal (PYPL -3.2%) is considering acquiring the social media company.
• The San Jose, California-based payments firm recently contacted Pinterest (PINS) about a potential deal, Bloomberg reports citing people familiar with the matter.
• The transaction could value the entire company at $45B, including the value of its untraded B shares, Bloomberg said. PayPal (NASDAQ:PYPL) would finance the deal mostly through stock, Reuters reported, citing sources. (Updated 1:50 PM ET.)
• Truist analyst Andrew Jeffrey said the potential combination makes "zero sense." "We see such a move as an act of near desperation as PayPal grapples with increased Buy Button competition, a formidable new BNPL tie-up between Square (NYSE:SQ) and Afterpay (OTCPK:AFTPY) and lagging Venmo monetization," Jeffrey wrote in a note to clients. (updated at 2:25 PM ET).
• The acquisition of Pinterest (PINS) could increase risk as it could create a conflict with PayPal's (PYPL) other large marketplace customers, Jeffrey added.
• Paypal's (PYPL) annual guidance is for 52-55M net new active accounts, NNAs, in fiscal 2021 and acquiring Pinterest (PINS) may hint at concerns hitting guidance and a slowdown in net additions in the second half of the year, Mizuho says, according to Hammerstone Markets.
• The negotiations are ongoing and may not result in a transaction, sources told Bloomberg. (updated at 11:45 AM ET).
• The two companies discussed a price of ~$70 per share, according to a headline on the Bloomberg terminal (updated 11:41 AM ET).
• Recall that almost a week ago, co-founder and board member Evan Sharp resigned as Pinterest's chief design and creative officer.
• Pinterest would by far be the biggest of a string of acquisitions that PayPal (PYPL) has made in recent years — agreeing to buy Japan's Paidy for $2.7B, acquiring Happy Returns for an undisclosed price, buying Honey for ~$4B in 2019, and iZettle for $2.2B in 2018.

Comments

[TommyIrish]

Bulls might want to consider the Chaiman's insider sales over the last year.

SPOILER ALERT: A bunch in the 60s -70sm but SURE, only a bill or something in insider sales in 12 months.

What graft, oops meant to say growth, investment is all about!

[ayjaybell]

great time to make an offer on PINS, you can offer more than the share price and still get a great deal..

[Sid Debgupta]

What exactly is Pinterest? Do they make anything useful? No. But then neither does most of the tech universe, like Fakebook. And Twitter. Ad infinitum.

[threeleaves]

@Sid Debgupta Blah blah blah. Utility is subjective. I personally don't use any of the platforms you mentioned, but to peg them as useless just because I don't use them would be completely NARCISSISTIC.

[bullish bengal]

@Sid Debgupta what a ridiculous comment.

[Affinity4Investing]

@Sid Debgupta One of the best comments I've ever seen here on SA in years!

[4FunandProfit]

I do not want to sell my PINS shares at $70

[gojuadorai]

@4FunandProfit
great i own PYPL stock and dont want to buy them for 70 usd

[Trading is not a losing proposition]

Articles like this make me want to cancel Seeking Alpha. This idea that a great company buying another great company is negative is beyond me. I bought PYPL on the dip today and am up 2% on it, probably make 3%. Thanks for freakin everyone out. I make money regardless of how stupid people are. And thank goodness for that. I understand it is dilutive for PayPal but not crazy.

[Jstic]

@I've Seen Colors From The Other Side My thoughts exactly. Sold $250 puts for $4 (Oct. 22). I'll be happy to pick up some shares for $246, or I'll bag some easy money on the premium.

I see this as a growth opportunity for Paypal.

It's a typical market overreaction.

[Purewater]

This is like when ICE tried to buy EBAY

[Catastrohpik]

I now see why PINS cofounder left

[Skih20]

Given a purchase price of $45B and PYPL stock down 6% ($18B) as I write, this just ain’t going to happen, especially via a mostly stock deal.

[2CommaClub]

@Skih20

And you based your conclusion on what? Your guts? What you wrote has no bearing on whether they buy PINS or not. If PayPal wants PINS; they will overpay in this market.

Whenever the acquiring company buys another; their stock always take a hit. So PayPal going down on a rumor has no bearing on the outcome.

[Skih20]

If this is largely a stock deal, I base it on PINS shareholders getting less than they bargained for - as it relates to swapping for a stock that’s worth 6% less than it was trading for yesterday. I realize that could change between now and the time that the deal closes, but nonetheless wouldn’t that give you pause today if you were a PINS shareholder?

[JackNife]

Didn't PINS reject MSFT at $86 in Feb? I can't see them agreeing to $70 today. I'll vote against $70. Way too low when I can likely get much more by being patient.

[justcuzitsme2]

@JackNife I agree I am voting no at 70. I would consider voting yes at 95-$105 level.

[nsei]

@justcuzitsme2 Same

[Brian Dermo]

@nsei Insiders control 99% of the voting power...

[Winnertakesall]

What on earth do these two companies have to do with one another...

[macmeyer]

@Winnertakesall not much - and that is the point. Paypal wants Pinterest in order to move further up the channel, ie catch a buying customer much earlier in the shopping process. They cannot currently do that, whereas Pinterest -whose business it is to inspire and induce potential buyers into a shopping decision- very much can. The tie-up would form a full-chain e-commerce and FinTech powerhouse.

That said, Pins is being undervalued at USD 70. A big no to this deal on the rumoured terms.

[User 54692059]

PYPL should not pay much higher than $70. PINS has slowing growth so it makes no sense to overpay, despite all the PINS holders predictably calling for ridiculous prices. I get that some of your are bag-holding after the recent drop it's not PYPL's job to bail you out lol.

[bullish bengal]

@Snorlax 125% yoy revenue growth is a lot of growth… or are you talking about US MAU?

[Henry1502inc]

@bullish bengal past growth, already priced in

[Qwerty2102]

Makes no sense for PayPal.

[King4Coins]

@Qwerty2102 Makes plenty of sense, they have a small company called honey which provides coupons for online purchases, integration with that and Vemno would make PYPL a juggernaut for product discovery and will ensure that their customers get the best price. Love the move and as a pypl shareholder I hope it goes through.

[msawi11]

@King4Coins also new revenue stream from advertising

[unan2010]

@King4Coins Couldn't you have done that with Ebay instead of splitting up?

[JJ Brink, CA, CFA]

Buy the dip

[Too Short]

Split on this. Own PINS (avg. basis around $40 a share though I started my position in the $20s) and on the one hand would like to see a little bit more on the offer. On the other hand, also own PYPL and this would be an absolutely gangster move for their ecosystem, so would be fine with them getting a deal on my PINS shares.

[Windermer]

@Too Short gengster gengster?

[EriCoin]

Good chance to re-enter PayPal after the drop. Thank you.

[joeyfern27]

They BETTER not sell for $70, my average price is $69

[MikeFromNZ]

Can someone snap Evan and get SNAP to make a real bid? Much better fit vs PYPL!

[Robert.from.Ct]

why not buy SNAP?

[Raysab]

@Robert.from.Ct Why not Wendy's? Pins is mainly a storefront and fits Paypal business

[unan2010]

@Raysab Wendy's makes no sense. Not enough beef in that deal.

[Julian Lin]

very interesting

[justcuzitsme2]

Hopefully this makes a nice steady climb back up after many of the weak hands got out.