- PayPal stock ends Wednesday lower as talk of PINS bid surfaces.
- PYPL shares ignite on social media but fall where it matters.
- PayPal said to bid $45 billion, according to sources.
PayPal (PYPL) stock ignited the news flow on Wednesday as reports surfaced that it is looking to buy Pinterest (PINS) in a deal reputedly worth $45 billion. While PINS stock closed up nearly 13%, PYPL stock was not so taken with the news as Paypal shares closed down 4.9% at $258.36.
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Paypal (PYPL) 15-minute
PayPal (PYPL) stock news
It appears it was a tweet from a Bloomberg reporter that first broke the news of the potential deal. Bloomberg reported that Paypal was exploring a deal for PINS in a $70 per share deal for PINS with Paypal offering mostly stock. The report quoted unnamed sources with those sources adding that Paypal hoped to tie up the deal before results on November 8. Reuters added, "The sources cautioned that no deal was certain and terms could change. They asked not to be identified because the matter is confidential."
Paypal and Pinterest did not comment on the news. Analysts appear mixed on the news with a tweet from CNBC's Carl Quintanilla quoting Bernstein as saying, "we struggle to see compelling synergies....well below highs achieved this year...while the dream of owning a platform to take on $AMZN is appealing, we'd offer $SHOP as more compelling deal partner if $PINS was so inclined”. Barclays reportedly sees "ample potential synergy opportunities," while Wedbush says the "combination would be a significant positive for PayPal's ongoing monetization initiatives on both sides of its merchant and consumer platforms, especially if Pinterest's social commerce platform gets integrated with Honey's AI into PayPal's destination app."
Why is Paypal (PYPL) stock down?
As the target company, Pinterest's shares rallied sharply, while those of Paypal fell on the news. The likely reasoning is the risk involved in the deal not going through and the fact that the deal is reportedly going to be all or nearly all stock. The likelihood of the deal going through is also questionable. Microsoft (MSFT) reportedly approached Pinterest (PINS) earlier this year, according to The Financial Times.
Paypal (PYPL) stock forecast
Given that Pinterest has already said "no" to Microsoft, this increases the risk of a no deal in our view. The fact that Paypal shares fell on the news gives further credence to doubts over the deal going through. Technically, Paypal stock is hovering around a strong support zone from its 200-day moivng average, but it is news flow, not technical analysis, that will drive this one in the short term.
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