Pinterest Shares Plummet 12% After PayPal Ends Rumors Of A $45 Billion Deal

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Shares of Pinterest plunged 12% on Monday after digital payments giant PayPal said that it was not interested in buying the social media network at this time, ending speculation about a potential $45 billion takeover which would have been one of the year’s biggest mergers.

Key Facts

PayPal “is not pursuing an acquisition of Pinterest at this time,” the company said in a one-sentence statement responding to market rumors around the potential acquisition on Monday.

Investors had mixed reactions to the news: Shares of Pinterest were getting crushed by midday, plunging 12%, while shares of PayPal jumped nearly 4%. 

News emerged last week that PayPal was looking for another big-ticket acquisition, with multiple outlets reporting that the company was in early-stage talks with Pinterest for a deal. 

The Silicon Valley digital payments giant reportedly mulled an offer to buy Pinterest at around $70 a share, which would have fetched a valuation of more than $40 billion.

A deal with photo bookmarking site Pinterest, which has in recent years introduced more online shopping features and partnered with Shopify, could have made sense for PayPal on paper, as the company continues its push to expand into e-commerce. 

Pinterest went public in 2019 and saw its revenue increase nearly 50% in 2020 to $1.7 billion amid a surge in new users; PayPal, meanwhile, was spunoff from eBay in 2015 and today has over $20 billion in annual revenue.

Key Background:

PayPal has a history of making big deals. Last month, the company bought Japanese buy-now-pay-later platform Paidy for $2.7 billion. PayPal’s biggest acquisition to date was in 2019, when it bought coupon and shopping reward site Honey for around $4 billion. Another deal looks likely, according to some experts, given that PayPal had more than $19 billion in cash, equivalents and investments on its balance sheet as of last June.

Big Number: Nearly $400 Million

That’s how much the fortune of Pinterest cofounder and CEO Ben Silbermann fell on Monday, bringing his net worth to $2.9 billion, according to Forbes’ estimates. Silbermann owns a 38% stake in the company, which went public in April 2019 and has over 450 million users worldwide.

Further Reading

PayPal Denies Reports It’s Pursuing Pinterest Acquisition Deal (Forbes)

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