PayPal mulls multibillion-dollar Pinterest acquisition to boost its retail standing

The news: The payments giant is in talks to buy Pinterest, which has a market value of about $40 billion, per The Wall Street Journal. Talks are still at an early stage, however, and may not lead to a deal.

Our take: We predicted last year that PayPal would ramp up its buying spree in 2021 and make multibillion-dollar acquisitions. Buying Pinterest, which would be PayPal’s largest acquisition to date, follows two other major purchases this year: logistics business Happy Returns in May and cryptocurrency storage and transfer service Curv back in March.

Why this matters: Pinterest would ramp up PayPal’s commerce capabilities as it aggressively pushes into retail.

• PayPal launched its super app last month, which includes a dedicated shopping hub where customers can discover deals, make purchases, and earn rewards. PayPal also integrated its digital promotions platform Honey directly into PayPal by offering cash-back rewards through PayPal, and it stepped into social commerce in August through a partnership with “link in bio” social media service Linktree.
• PayPal could integrate Pinterest into its new super app, boosting its shopping hub and likely drawing in more users. And becoming a more attractive shopping destination sets PayPal up for additional cross-promotion opportunities, like pushing its buy now, pay later (BNPL) offering.
• PayPal could also integrate Honey directly into Pinterest, improving Pinterest’s shopping solution and letting PayPal capture more sales volume as shoppers look for deals and ways to save.

Long-term impact: Pinterest is the third-largest social commerce platform in the US: 5.6% of internet users, or 13.9 million people, will make a purchase on Pinterest in 2021, according to our forecasts. And with US retail social commerce sales expected to hit $36.62 billion in 2021, Pinterest brings with it a massive volume opportunity for PayPal, allowing it to reach Pinterest users earlier in the shopping experience. If the acquisition comes to fruition, it should propel the payments giant’s growth: In Q2, PayPal’s total payment volume (TPV) shot up 36% year over year (YoY), hitting $311 billion.

Related content: Eager to read more? Check out what our Connectivity & Tech analysts have to say about what this possible acquisition means for both PayPal and Pinterest.