PayPal Holdings Inc’s pursuit of Pinterest Inc would be a giant leap away from its long-time image as a mere online checkout button.
For months, PayPal has been touting its ambitions to become the next global “super app,” akin to China’s Alipay or WeChat, India’s Paytm or Singapore’s Grab — digital ecosystems that blend social media, commerce and banking.
The firm, which earlier this year launched a high-yield savings account and shopping features, is said to be weighing a US$45 billion acquisition of Pinterest — a visual search and scrapbooking platform that lets users save, collect and group images by theme.
“The key value proposition for PayPal would be to have an anchor in Internet, and/or e-commerce and social media, which helps diversify away from standard online checkout,” Mizuho Securities USA analyst Dan Dolev said in a note to clients. “PayPal could potentially add more shopping capabilities and boost its e-commerce presence, potentially competing with other large online retailers like Amazon or Shopify.”
PayPal, founded in 1998 by a group of investors including Peter Thiel and Elon Musk, got its start as a way to pay for things online at a time when many businesses were still relying on paper checks or cash to conduct e-commerce.
Since then, the company has amassed more than 400 million users and its checkout button remains one of the most popular for online merchants to add to their Web sites.
However, Paypal chief executive officer Dan Schulman wants to go further and move the company beyond the checkout page. With Pinterest, it could glean even more data about the products consumers are buying.
“It is difficult to link specific consumers to specific purchases. PayPal has recently described its own aim to become more of a shopping destination by leveraging consumer data,” Barclays PLC analyst Ramsey El-Assal said in a note. “In addition, the company is pursuing the ‘super app’ concept, where users are monetized more holistically and engagement becomes an increasingly important metric. We see a potential acquisition of Pinterest as advancing both strategic initiatives.”
Shares of PayPal tumbled 4.9 percent to close at US$258.36 on Wednesday after Bloomberg reported on its interest in Pinterest.
The stock has gained 10 percent this year, trailing the 21 percent advance on the S&P 500 Information Technology Index.
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