BofA On PayPal's Potential Pinterest Buyout

Several media reports suggest PayPal Holdings Inc PYPL may acquire Pinterest Inc PINS for $70 per share, valuing the company at around $48 billion. While Pinterest can boost PayPal’s "Super-App" strategy, the acquisition entails risk, according to BofA Securities.

The PayPal Analyst: Jason Kupferberg maintained a Buy rating for PayPal, while keeping the price target unchanged at $323.

The PayPal Thesis: While PayPal has not yet made an offer, Pinterest could be exploring its options and, following co-founder Evan Sharp stepping down, CEO Ben Silverman “may be looking for a strategic change,” Kupferberg said in the note to clients.

“The potential Pinterest acquisition could allow PYPL to cross-sell between user bases, expand its revenue stream into advertising, and deepen customer relationships, leveraging Pinterest’s extensive data,” the analyst wrote.

“Additionally, we believe PYPL could bring its payment expertise to PINS, which would help Pinterest realize its vision of becoming a commerce platform, while helping PYPL further its 'Super-App' strategy,” he further mentioned.

This would be PayPal’s largest acquisition to date and has “inherent integration and execution risk,” while the company continues to be “juggling multiple organic initiatives,” Kupferberg said.

“We also note that PINS has recently struggled with US MAU growth,” the analyst said. He added that Pinterest faces “intensifying competition for users and advertising dollars from Instagram, TikTok, and Twitter, amid an environment of increasing regulatory scrutiny.”

PYPL Price Action: Shares of PayPal had declined by 5.70% to $243.64 at the time of publication Thursday.

Photo by Souvik Banerjee on Unsplash