Digital payments group PayPal is in the late stages of a $UA40 billion plus offer for social media platform Pinterest Inc, according to several media reports.
CNBC says PayPal is looking at $US70 a share, valuing Pinterest at nearly $US40 billion.
Why would a digital payments company want to become a social media platform?
The reverse has been true for a while now with the digital giants creating their own payment systems, such as Apple Pay and Google Pay.
The big platforms want to be digital payment companies because this makes it easier for consumers to spend with them. Advertise with us, they tell brands. We make it simple for our users to make online purchases.
PayPal, by owning a social media platform, could emulate the digital platforms, using its payment services to generate ecommerce.
Analysts say PayPal’s interest in Pinterest might be a response to Square’s move to buy Australia’s Afterpay.
Pinterest is an advertising supported platform. Ownership by PayPal would broaden its revenue to ecommerce.
Analyst Lisa Ellis of MoffettNathanson told CNBC’s The Exchange: “... if PayPal ends up going ahead with this acquisition, it’ll bring a lot more commerce and shopping discovery content into the PayPal ecosystem.”
The Wall Street Journal: “A potential Pinterest acquisition would bring PayPal hundreds of millions of new users and help it meet its target of doubling the number of PayPal active accounts to 750 million by 2025. “
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