A person familiar with the situation told CNBC that PayPal is in late-stage talks to buy social networking startup Pinterest. Because the deal conversations were private, this person requested anonymity.
Pinterest’s stock jumped on Wednesday after Bloomberg reported that PayPal was in talks to buy the social media startup.
The company’s stock was briefly suspended twice before finishing with a gain of more than 12%. PayPal, on the other hand, was down about 5%.
According to Bloomberg, PayPal has explored acquiring Pinterest for a price of roughly $70 per share, valuing the firm at around $39 billion. On Tuesday, Pinterest stock closed at $55.58 per share.
Both PayPal and Pinterest did not respond to requests for comment.
Pinterest went public in April 2019, with a market capitalization of slightly over $10 billion.
PayPal is considering an acquisition due to competitive pressure from e-commerce platform Shopify, according to a source who spoke to CNBC. Shopify has put a lot of effort into combining e-commerce with financial. It teamed with Affirm, a purchase now pay later company, last year to become the official point-of-sale financing provider for Shop Pay, Shopify’s checkout service.
Since the commencement of the coronavirus pandemic, PayPal has benefited greatly from the surge in internet buying. With its “Pay in 4” offering last year, it took on the rising buy-now-pay-later companies. Pinterest’s possible acquisition may propel the firm into the booming field of social commerce, which is being pursued by other digital behemoths.
For example, Facebook has made a concerted effort to make Instagram shoppable. It began testing a dedicated “Shop” tab on its home screen last summer. It also allows users to shop through ordinary Instagram posts, Live, Stories, and its Explore feed, as well as experimenting with purchasing on its short-form video feature Reels.
Companies may track clicks and transactions within their apps using social commerce, allowing them to show advertisers how effective their ads are. It may also allow businesses to take a percentage of each transaction.