PayPal, "No Plans to Acquire Pinterest"... Pinterest Stock Drops 12%

Direct Denial of Acquisition Rumors Spreading in the Market
"Concerns That Merger Synergy May Not Be Significant"

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Hyunwoo Lee] The major U.S. overseas payment service provider Paypal has outright denied acquisition rumors regarding the social media company Pinterest, which were previously raised by foreign media. Pinterest's stock, which surged amid expectations of the birth of a new mega social commerce company, plummeted immediately after the denial of the acquisition, dropping more than 12%.

According to CNBC on the 25th (local time), Paypal stated on its website that "there are no plans to acquire Pinterest at this time" and that "this announcement is a response to recent market rumors." This was a direct denial of the acquisition rumors that had spread across the market following Bloomberg's report on the 22nd that Paypal was considering acquiring Pinterest.

Immediately after Paypal announced the denial, Pinterest's stock price plunged. On the Nasdaq market in the U.S. that day, Pinterest's stock, which had been rising more than 6% before the opening, closed at $50.68, down 12.71% from the previous close. Until the day before, the market had been buoyed by expectations that Paypal would acquire Pinterest, with a market capitalization of $37 billion (about 43 trillion won), for about $45 billion, causing the stock price to rise for several days.

CNBC pointed out, "Paypal had been considering acquiring Pinterest to benchmark Shopify, a social commerce company expanding its scale through integration of online and offline stores and social networking services (SNS). However, concerns had been raised that Pinterest's performance in the social commerce sector was not significant and that it still relied on advertising revenue, so the synergy with Paypal might not be substantial."

Andrew Jeffrey, an analyst at Truist Securities, also warned in an interview with CNBC, "The recent success of social commerce companies was largely due to store closures caused by COVID-19, but with the recent economic normalization, their appeal may no longer be significant." He added, "Rather, conflicts of interest with Paypal's other online shopping malls could have a negative impact."