Stock of the Week: PayPal

We’re not sure there were shared interests in a Pinterest deal anyway.

Andrew Willis 8 November, 2021 | 4:28AM
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Andrew Willis: There was a lot of talk about Paypal potentially acquiring Pinterest, which could have been good news for Pinterest – but since no deal has been announced, we don’t think it made a lot of sense for Paypal. The market’s reaction to the possible deal may have been a sign, Paypal dipped 5% while Pinterest jumped 13%...

An acquisition is a lot of work and acquiring Pinterest may have been unnecessary for Paypal. As senior equity analyst Ali Mogharabi puts it, Paypal is already well-positioned to realize similar benefits by partnering with Pinterest instead of buying it.

For Paypal, buying Pinterest would mean taking on more risk to bring in new revenue… A Paypal-Pinterest deal could improve ad conversions – and lead to income from a digital advertising market set to grow at a rate of 16.5% yearly.

But as the company currently sits in 1-star territory, investors have high expectations for the company, so management might need something big, something the likes of Shopify, or Amazon, perhaps? Worth keeping in mind at least.

For Morningstar, I’m Andrew Willis.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
PayPal Holdings Inc185.70 USD3.56Rating

About Author

Andrew Willis

Andrew Willis  is Senior Editor for Morningstar.ca. Follow him on Twitter @AndrewWillisCDN.

 

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