Is acquiring Pinterest a smart move for PayPal?

The potential deal would be “a significant positive” for PayPal, Katri wrote in a note on Wednesday following the reports, as buying Pinterest could be a boon for PayPal’s “ongoing monetization initiatives on both sides” of its merchant and consumer platforms, particularly if Pinterest’s “social commerce platform gets integrated with Honey’s A.I. into PayPal’s destination app.” (PayPal acquired Honey, a coupon browser add-on and app, in 2019.) He suggests there’s “opportunity for engagement to accelerate within the destination app post-integration.”

Indeed, Colin Sebastian, a research analyst at Baird, agrees “there would be clear synergies in combining PayPal’s ‘bottom of the funnel’ digital wallet and deals (Honey) platform with Pinterest’s search, discovery, and inspiration (top of funnel) platform,” fueling PayPal’s touted “super-app” ambitions, he wrote in a note Wednesday. He points out that with Pinterest’s over 450 million monthly users looking for products and things they want to buy, that “massive source of value (and data)” could be a boon for PayPal’s services and “remove friction” when purchasing things.

Digital marketing, meanwhile, is an “underappreciated part of PayPal’s plans,” Sebastian argues. A Pinterest–PayPal deal could propel PayPal into “one of the leading digital marketing platforms, combining Pinterest’s existing ad business with PayPal’s valuable transactional data,” he wrote.

Price tag–wise, Pinterest’s stock is off roughly 30% from its all-time high in February as the platform has been losing users—a discount from when reports swirled that Microsoft was looking into buying the firm at around $51 billion early this year. Reports suggest PayPal is considering paying around $70 per share for the company (roughly $45 billion, per Bloomberg), but those like Baird’s Sebastian, at least, suggest PayPal might need to cough up something above that $70 threshold. “With Pinterest shares under significant pressure since [second quarter] results due to user churn, we do not believe the valuation embeds the significant opportunity of the platform to expand monetization in both the core U.S. and international markets,” he wrote.

A social strategy

To be sure, this certainly wouldn’t be Pinterest’s first foray into social commerce: It already has a partnership with Shopify. But for Pinterest, a PayPal team-up “makes strategic sense,” Katri wrote, as a deal “at its heart is based on the growing and critical theme of social commerce, and integrating a payments business with a shoppable social app is forward-looking in our view,” he argues (though Katri tells Fortune it’s not necessarily new to PayPal, as he argues the Venmo app is “also a social commerce tool”). It’s estimated social commerce could grow from $26.8 billion last year to $52.5 billion in 2023, he points out.

Though Pinterest’s user engagement is below that of “typical social platforms,” Katri notes, “the intent of users is quite different. It’s proving to be an important channel for digital advertisers that can tie together top of funnel intentions increasingly with transactions at the bottom of the funnel,” he wrote. “Pinterest has been intently focused on driving greater shoppability into its platform,” and he notes that product inventory grew almost 50% in the second quarter “driven by Pinterest’s Shopify partnership expansion.”

It seems for now that at first glance, Pinterest investors are a bit more enthused at the prospect than PayPal’s: Pinterest stock rose nearly 13% on Wednesday, while PayPal’s slumped roughly 5% by the close.

But until any deal is confirmed, it looks like we’ll just have to put a pin in it.

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