WTF: PayPal to Acquire Pinterest for $70

hey everyone kevin here so news just

came across that paypal is considering

buying

pinterest now pinterest went up as high

as 19 of the news vacillating around 10

to 13 right now who knows maybe he'll

bleed out more but the discussions are

rumored to be taking place around 70 per

share for pinterest now paypal shares

are down obviously because paypal

doesn't have 40 billion dollars in cash

so they'd have to either sell shares or

just

issue shares to paypal or pinterest

shareholders to make this deal happen

hence why paypal is selling off a little

bit not necessarily that paypal

shareholders don't like this idea it's

just it's dilutive

now paypal for

what it's worth is looking at pins as a

profitable company pence's expected to

be potentially as much as 700 million

dollars in the green by the end of this

year as we like to say in the black in

accounting profitable so they're not

losing money anymore they could be

seeing revenue as high as a billion

dollars next year on bottom line so net

revenue or i should just say net income

of a billion dollars by next year and

potentially two billion dollars of net

income by 2025 at 70 per share once you

count all the classes of shares you're

probably looking at paying close to 45

billion dollars for pinterest and the

acquisition rumors which have not been

confirmed by either

pinterest

employees or paypal employees it has a

lot of folks scratching their heads

there is a lot of

focus from paypal right now on the

online shopping boom we know that the

pandemic has accelerated folks

transitioning to uh online shopping and

becoming more familiar and used to

shopping online rather than going to

brick and mortar uh this is this news is

also by the way helping etsy uh pump up

and that's probably because of an

endorsement by paypal into

the online shopping movement right

before the holiday season it's worth

noting that paypal has been doing a lot

to really try to

either get access to our data or make

our lives easier when it comes to online

shopping

consider that paypal bought honey the

checkout coupon finder for four billion

dollars so recently paypal also bought

paidi a japanese

buy now pay later platform

paypal does offer buy in four

buy now pay later although i haven't

seen specific longer term zero percent

financing kind of like the way a firm

does in partnership with other companies

i'm a little surprised that paypal would

be interested in paying 45 billion

dollars for pinterest

where we've seen user growth missed

estimate miss estimates in a quarter two

a slowdown coming out of the pandemic

last two times that pinterest has

reported earnings the stock fell about

10 percent

the stock has been one of my

unfortunately recent losers

uh and uh

that's it's been one of the stocks where

i've been looking at it like huh it's

just one of these days it's gotta bounce

back it's like come on wake up and do

something and finally i mean we have a

bounce here on this paypal news but this

could be fleeting this rumor could also

disappear quite frankly uh this uh this

deal might not come together at all

but when we search for hints as to why

paypal might be doing this

it helps to just kind of think for a

moment okay so

pinterest has sold down which makes them

more attractive

they are profitable and their stock has

been falling they had a peak in february

they've been falling since then part of

it has to do with user growth slowing

down the co-founder stepping down

acquisitions or i'm sorry

accusations of discrimination by women

inside the firm

and uh

and overall potentially uh a favor of

companies like etsy over pinterest

though i have to say in just anecdotal

conversations with vendors there are a

lot of vendors who seem to think that

pinterest has a higher conversion rate

for ads

compared to companies like facebook or

even google uh google ads and and this

makes sense for facebook especially

since the uh apple iphone changes for

what kind of data

facebook is able to track and use for

advertising from for example iphone

users where somebody with an account on

pinterest might be able to have a lot

more of a customized algorithm i

personally have found a pinterest

algorithm very very quick to adapt

almost somewhat addicting

pinterest has recently had its website

traffic

finally u-turn from a declining trend to

an increasing trend in august as

pinterest introduced and finally

implemented because they started talking

about this back in may but finally

implemented the ideas pins now i'm not

too familiar with idea pins but it does

seem like idea pins are

an opportunity for creators to pitch

products and integrate products into

recipes and instructions and create

videos and voiceovers and music so

really trying to build up a creator

experience with shopping which is pretty

smart because then you could follow not

just uh topics but also creators and uh

and immediately buy what somebody else

is buying quite frankly i think that

youtube should do things like this like

i i wish you you'd be able to just like

click here and buy this this dagger this

runescape dagger off etsy right uh you

know that'd be kind of cool if i held

this up and all of a sudden below here

there was a button or on screen you just

click the button and you can buy this or

below there's a little icon that lets

you check out for this

you know dragon medium helmet that i got

3d printed right so uh

i think those things would be very cool

and very smart for an improved online

shopping experience and i think

pinterest is is an avenue for making

that happen now paypal doesn't have

doesn't really have like an e-commerce

store right they show up as the checkout

option on other people's

websites or domains or whatever

and uh paypal obviously

wants to process as many transactions as

possible if they do buy now pay later

they take the transaction if you pay

with paypal they take a transaction cut

if you know somebody's checking out with

honey even if they're not checking out

with paypal paypal can track where

you're spending why you're spending what

your habits are they can cater their

algorithms to try to figure out where

are customers who knows it's entirely

possible and this is just speculation

but it's entirely possible that paypal

acquired honey

realized a lot of people were

discovering these random merchant

websites

through

uh pinterest

and and that they're actually seeing wow

wait a minute we can now track people go

from pinterest

to

e-commerce stores of whatever companies

and then they're they're trying to use

honey for coupons or whatnot

why why not potentially try to take

control of the pinterest platform

because

see here's what happens if you get

merchant platforms

that have that you know anybody can use

honey right because that's just uh

that's just a browser plug-in that you

click on and then it looks for coupons

right so the merchant doesn't actually

have to put a honey button on their

website but in order to have paypal the

merchant would have to agree to put

paypal as a checkout option on their

website

which paypal by the way is an option

for my programs on building your wealth

link down below where you can get 29 i'm

sorry you can still get 41 percent off

using coupon code diamond hands all the

way through

uh october 29th when the price goes up

but there is a paypal option and you can

pay in four with paypal by the way but

anyway uh with paypal you actually have

to have a merchant that's willing to go

out of their way to integrate paypal

which i did

and one of the interesting things about

acquiring pinterest potentially is that

if merchants are advertising on

pinterest and now they're working with a

paypal company

maybe

one could imagine that there would

either be an incentive or probably not a

requirement but but some sort of uh

inducement to hey if you're gonna

advertise on pinterest owned by paypal

why not also click this button and

enable paypal checkout on your store

it it is basically i think that

i don't really think that paypal really

wants pinterest i think they want more

checkouts

using paypal

and if they can use pinterest as the

trojan horse

for getting more checkouts with paypal

because now they're in conversation with

merchants who are advertising

who are spending money for more business

and paypal is like hey you know while

you're spending money for more business

you know we could save you fees by

switching to paypal as well as 15

minutes i'm just kidding uh but anyway

um it's interesting to me now one thing

that a course member pointed out which i

thought was also fascinating i'm gonna

put it up on screen here take a look at

this

so uh here's a product product manager

checkout integration career opportunity

at paypal

and here's the description

the branded experience team

with

which is the core

payment business at paypal is looking

for a talented ambitious and

self-motivated product manager to own

and drive paypal's checkout selection of

products

so that's interesting selecting products

where paypal is maybe going to offer buy

now pay later like a firm does right

you will play a key role in crafting the

buyer experience for online shoppers all

the way this is interesting from

discovery pinterest to selection of

payment methods honey and paypal

to completion of their shopping

experience using paypal or various

product offerings buy now pay later

you will be responsible for building

these experiences

for paypal's core markets and emerging

markets if you're eager to shape the

future of commerce globally whether it's

web or mobile and have a proven track

record of launching successful products

at scale at scale we have a role for you

it seems expensive though i mean paypal

is paying you know paypal paying 45

billion dollars for pinterest when

paypal's market cap uh is sitting at 304

billion dollars 45 divided by 304 ish

that's about 14.7 percent about 14.7

percent of paypal's market cap going to

pay

for paypal and we don't know if it's for

sure yet

but uh

if we look at it the way i feel like we

just had a conversation about it

it kind of makes sense and pinterest has

some big growth in it it's kind of a

sexy newer company it went public in

2019 you've got a growth rate of like 50

percent and 20 20 like 80 80 in 2020 uh

to 50 in 2021 probably between 20 and 30

percent in in the years going forward

they're still going to grow maybe not as

fast as other people think but they're

still growing

uh and you've also got uh paypal which

has a pretty strong growth rate you know

19 20 21

pretty strong for what is a relatively

mature company but uh this this could be

that sax appeal that really expands

paypal into a completely different

market i mean really

you have potentially thousands of

hostage advertising vendors that aren't

using paypal

who now might be tempted to use paypal

it's smart i don't know about the

numbers

paypal's going down in my opinion again

not because uh you know paypal and

investors are like this is stupid i

think it's more because again it's

dilutive

uh to the shares that you own at paypal

and and i mean you would be getting an

asset in return but you know people who

are in paypal may not have bought

pinterest and maybe aren't convinced yet

so sure it balances out it's like hey

we're going to issue 45 billion dollars

in more shares but we're going to get an

asset that's 45 billion more

it should balance out but

as a percentage of of uh of the float uh

that's available you're you're going to

be increasing the percentage of paypal

shares outstanding

uh and uh and available for trading and

that usually leads stock prices to go

down even though it should even out on

the accounting side so there probably is

some element of uh some paypal investors

being a little spooked by this and

confused by this

but i i think i can see it again we

don't have an official statement yet

from the companies but i think i'm gonna

wrap my head around it i actually don't

think it's that terrible

so anyway

there you have my thoughts on paypal

pinterest would i buy

paypal

maybe

maybe i i i

i'm not convinced but maybe maybe

it would make sense to potentially sell

some puts on paypal

uh since it's going down

uh i also have because look if the deal

falls through the stock will go up

if the deal goes through

uh maybe there'll still be some downward

pressure for paypal but

it's an interesting long play

and it might make sense to try to back

door into paypal with some sold puts

especially on a potential elevated day

of volatility like today i also am down

on call options on paypal i'm sorry on

on pinterest and if they converted to

paypal options

i don't know that i'd be upset

you know i'm

let's put it this way i'm intrigued i'm

not convinced

all right folks thank you so much for

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