Business

PayPal Vision Board Focuses on Pinterest

Idle pinning is sufficient. PayPal PYPL -4.91%

Holdings may want it to be able to inspire Pinterest‘NS

pin 12.77%

Users start spending real money.

According to The Wall Street Journal, payment giants are in the early stages of negotiations to buy a social media company. Trading is PayPal’s biggest new bet ever, and the realization that Pinterest’s best potential may be in someone else’s hands.

PayPal aims to reach 750 million active users by 2025, well beyond payments. This includes a set of credits and other financial tools aimed at attracting and further monetizing users, from invoice payments to encryption. But it also aims to move the ladder up to the decision that consumers spend in the first place.

Playing a role in that shopping decision is an important revenue opportunity. Not only does it potentially increase payments, but merchants also pay for access to their goal-achieving process. Famous for its motivated access to image-sharing platforms, Pinterest makes money primarily through advertising for related products. Together, you might expect PayPal’s “SuperAppli” to play an important role in many parts of the shopping experience.

In the advertising business, Pinterest didn’t want to compete closely with Facebook and others for algorithm-based targeting. And while we plan to finally pilot a seamless online transaction by the end of this year, it has not yet reached the commercial transaction formula that will give it an edge.

Perhaps PayPal will help unleash its formula and make it easier and more compelling for Pinterest users to buy something that inspires them. Pinterest has more than 450 million monthly active users as of the second quarter, but it hasn’t been able to monetize many of them, especially those outside the United States.

PayPal can help you find opportunities on Pinterest’s most profitable user base. In 2019, Pinterest said in its initial public offering filing that two-thirds of the total number of monthly active users are women and eight out of ten mothers in the United States are using the platform. But especially in the United States, platforms are struggling to appeal to demographics outside that niche. A recent Morgan Stanley study found that a subset of young male users had little interest in what Pinterest offered.

Some investors may find this potential transaction reminiscent of the previous combination of PayPal and eBay. Being tied to a merchant platform has undoubtedly limited PayPal’s opportunities in a variety of ways, and has since benefited significantly from Swiss payments. However, PayPal may see Pinterest as a discovery platform to direct users to a long list of merchant partners, rather than as a competing end destination. The question is what needs to happen to the ongoing partnership between Pinterest and Shopify,

This is, in some respects, comparable to PayPal for merchant business, including its own payment button.

Pinterest’s share rose 13% on Wednesday with news of potential transactions, while PayPal’s share fell 5%. Bloomberg reported on Wednesday that the company had discussed a potential price of about $ 70 per share, citing people with knowledge of the matter. According to the report, Pinterest will be worth about $ 45 billion, including Class B shares. This is a premium for the current fully diluted market value of $ 35.8 billion.

At its peak earlier this year, Pinterest gained well over $ 55 billion in market value. This is due to the rush of homebound users to the platform in the depth of Covid-19. Many of these users have left the platform since then, questioning Pinterest’s ability to grow meaningfully on its own.

The bottom line is that while PayPal benefits from using the app for more purposes, Pinterest needs to find a way to get more users to pay. Sometimes the most inspirational is only what is really essential.

I heard stock picking leaderboard

Write in Telis Demos (telis.demos@wsj.com) and Laura Forman (laura.forman@wsj.com)

Copyright © 2021 DowJones & Company, Inc. all rights reserved. 87990cbe856818d5eddac44c7b1cdeb8

PayPal Vision Board Focuses on Pinterest

Source link PayPal Vision Board Focuses on Pinterest

Back to top button