Should PayPal still buy Pinterest?

Discussion
Source: Pinterest
Oct 26, 2021

Multiple outlets last week posted stories indicating PayPal was in advanced talks to acquire Pinterest to transform itself into a social commerce powerhouse. On Monday morning, however, PayPal issued a brief statement clarifying that the company is “not pursuing an acquisition of Pinterest at this time.”

At a reported purchase price of $45 billion, the deal would have ranked as the largest transaction in the Internet space over the past decade.

The acquisition was expected to guide PayPal CEO’s Dan Schulman vision of evolving PayPal into a “super app,” akin to China’s Alipay and WeChat that combines social media, commerce and banking.

Pinterest lets users share photos and links to recipes, home-decor and fashion ideas. The advertising-driven platform has been building out its e-commerce push with Product Pins that take shoppers directly to checkout pages at retailers’ websites.

PayPal has made a series of acquisitions, including rewards app Honey Science, the Japanese buy-now, pay later firm, Paidly, and returns specialist Happy Returns, to move beyond its position as e-commerce’s checkout button. Some saw the biggest potential benefit of a merger with Pinterest being access to the data of social platform’s 454 million-strong user base that could allow for targeted advertising.

“This is PayPal’s play to parlay into the exploding social commerce business,” Forrester VP Mike Proulx, told Adweek. “Every social platform is doubling down on native, in-application commerce experiences, recognizing that they’re a fertile territory in the next era of digital commerce.”

Sanjay Sakhrani, at Keefe Bruyette & Woods, said in a note, according to Bloomberg, “We could see how Pinterest could enhance engagement between consumers and merchants with PayPal being a central facilitator in the commerce journey.”

Concerns around the potential deal included overlap with PayPal’s more than 400 million users and integration risk. According to Reuters, JP Morgan’s Tien-tsin Huang wrote in a note, “Running a platform primarily focused on driving user engagement and advertising would require PayPal to use muscles it isn’t accustomed to using.” 

Truist’s Andrew Jeffrey in a note, according to Barron’s, saw “little or no strategic rationale” in the merger and believed it “could create conflict w/PayPal’s other large marketplace customers.”

DISCUSSION QUESTIONS: Would the merger of PayPal and Pinterest have made sense? Does the potential combination offer any insights around monetizing social commerce or social media platforms?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"PayPal should look for synergistic plays where their payment service replaces a high-friction hot mess."
"It makes more sense for Pinterest to acquire PayPal."
"Hopefully PayPal will continue to focus its sights on becoming a ubiquitous payment platform."

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7 Comments on "Should PayPal still buy Pinterest?"


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Mark Ryski
BrainTrust

It makes more sense for Pinterest to acquire PayPal. The idea of connecting a payment service to a social media platform that presents countless products/services makes complete sense, but it seems to me that the social media platform should be the leader, not the payment service. The other issue is price – at a $45 billion valuation, this would be a big swallow for the biggest of the big.

Bob Amster
BrainTrust

Agree. If PayPal does acquire Pinterest, is Pinterest going to mandate that its customers use PayPal as the payment method? That won’t fly. At $45 billion this is too expensive to be simply the acquisition of a vast customer list. I don’t see it.

Neil Saunders
BrainTrust

Sales from social commerce platforms are growing rapidly so it makes sense for PayPal to get into the space – especially as it can use its payment technology to facilitate purchases. In many ways, Pinterest is an ideal selling platform because it is visual and a great showcase of everything from home design trends to fashion to food. PayPal can do a lot to commercialize this for retailers and brands. That said, whoever owns Pinterest needs to work hard on retaining and expanding the user base in a world where audiences are saturated with various social media choices.

Phil Chang
BrainTrust

Hopefully PayPal will continue to focus its sights on becoming a ubiquitous payment platform. If they’re not watching, Google Pay/Apple Pay will come up and take the ground from underneath them.

There are so many opportunities for PayPal to continue to expand (personally I love it) that I hope they don’t get distracted by the pretty pictures (literally – don’t get distracted by Pinterest). I do think there’s legitimacy in expanding users by acquiring a “network” but a less pretty but fuller picture would be — Telegram? Signal? Something secure, that enables users to trust that they can have private conversations and also transfer money/pay for things. WeChat is great if you’re in Asia but it just doesn’t do it on this side of the world – Paypal + a messaging system would be a fantastic pairing.

Melissa Minkow
BrainTrust

PayPal would be wise to get into social commerce, but Pinterest doesn’t make sense as the choice for that. Consumers use Pinterest for inspiration, not necessarily for exactly what they want to buy. Pinterest would have to build out its capabilities to alter how consumers are using it in order for the purchase to be a seamless foray into social commerce for PayPal.

David Spear
BrainTrust

PayPal made the right decision to back away from this deal. The price tag alone is a whopper that might not be digestible in the out-years. Instead, PayPal should look for synergistic plays where their payment service replaces a high-friction hot mess.

Craig Sundstrom
Guest

…biggest potential benefit of a merger with Pinterest being access to the data of social platform’s 454 million-strong user base that could allow for targeted advertising.

A sad comment on what (much of) the internet has become about. Although PayPal itself is certainly useful, its marketing is the worst I’ve encountered, endlessly pestering me with the same “exciting” offer I’ve turned down literally hundred of times before … and, it seems, will have to again.

wpDiscuz
Braintrust
"PayPal should look for synergistic plays where their payment service replaces a high-friction hot mess."
"It makes more sense for Pinterest to acquire PayPal."
"Hopefully PayPal will continue to focus its sights on becoming a ubiquitous payment platform."

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