The PayPal app that appears on an iPhone.
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The US payment giant PayPal said on Sunday that it was currently not interested in buying the social media platform Pinterest.
In response to so-called “market rumors”, the financial technology company said in an update on its website that it is “not currently seeking a takeover of Pinterest”.
PayPal shares rose over 6% in pre-market trading on the Nasdaq exchange, while Pinterest shares fell over 12%.
A person familiar with the matter told CNBC that PayPal was in late-stage talks on Wednesday to buy social media company Pinterest after Bloomberg first reported on it.
Pinterest stocks soared on the back of the report. The company’s stock was paused twice before closing more than 12%. PayPal, meanwhile, has closed almost 5%.
PayPal had discussed buying the company at a potential price of around $ 70 per share, which Bloomberg said would be worth about $ 39 billion.
Pinterest, which allows users to create and share image boards, went public in April 2019, where it was valued at just over $ 10 billion. Its market capitalization is now around $ 37 billion.
The CNBC source said PayPal was being pushed to consider buying Pinterest following competitive pressure from the Shopify e-commerce platform. Shopify has invested heavily in merging e-commerce and fintech.
PayPal has benefited greatly from the boom in online shopping since the beginning of the coronavirus pandemic. Last year, it took a stand against the growing buy-now-pay-later companies with its “Pay in 4” offering. A potential Pinterest acquisition could push the company into social commerce, a growing area other tech giants are already working on.
Facebook, for example, has worked hard to make Instagram buyable. Last summer it started testing a special “Shop” tab on its home screen. It also allows users to shop through regular Instagram posts, Live, Stories, and its Explore feed, and has tested shopping on its short-form video feature Reels.
Social commerce enables companies to track clicks and purchases in their respective apps so they can demonstrate the effectiveness of ads to advertisers. It could also allow companies to receive a cut on every transaction.
Andrew Jeffrey, an analyst with Trust Securities, told CNBC last Thursday that he was skeptical of a merger between PayPal and Pinterest.
“Moving to another online deal, even on social media, just doesn’t make much sense in the long run,” said Jeffrey, adding that PayPal needs to make money in the physical world.
“Unless the company can monetize e-com (instore) with Venmo, we believe that growth will ultimately return towards e-com growth and that kind of slowdown is not currently priced into the stock,” he added added.
– CNBC’s Jessica Bursztynsky and Kate Rooney contributed to this story.