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).