PayPal reportedly looking to acquire Pinterest

The price offered by PayPal for the acquisition of Pinterest is 62 times the social media company's earnings over the last 12 months.

Payments giant PayPal Holdings Inc is reportedly in advanced talks to acquire Pinterest Inc.As per one of the sources, both the companies have discussed a potential price of $70 per share, which would value Pinterest at around $39 billion. If the deal is successful, it will mark the biggest acquisition of a social media company so far. Currently, this feat is held by Microsoft, which acquired LinkedIn for $26.2 billion in the year 2016, making it the biggest transaction in this category. The price offered by PayPal for the acquisition of Pinterest is 62 times the social media company's earnings over the last 12 months.

Following the news, PayPal shares fell 4.9% to close at $258.36, while Pinterest shares jumped 12.8% to $62.68.The deal talks come as internet shoppers increasingly buy items they see on social media, often following "influencers" on platforms such as TikTok and Instagram. Also, competitive pressure from e-commerce platform Shopifymay have pushed PayPal to explore the acquisition.

Social commerce has been on the rise lately, and since the pandemic, users are preferring buying online, mostly in the apps,if they support in-app purchases. Facebook, for example, has heavily pushed into making Instagram shoppable, which lets you buy a product from social media posts. Youtube also offers this feature via dedicated shopping tags displayed on the video. Acquiring Pinterest would allow PayPal to capture more of that social e-commerce growth and diversify its income through advertising revenue.