PayPal rejects reports that it was in talks to buy Pinterest Inc

Shares of Pinterest Inc (NYSE: PINS) fell more than 15% on Monday after PayPal Holdings Inc (NASDAQ: PYPL) rejected reports that it was in pursuit of acquiring the social networking service for over $40 billion. 

PayPal shareholders cheered the news

PayPal’s announcement was in response to a Bloomberg report last week that said the digital payments giant had offered $70 a share to buy Pinterest that would have made it the largest acquisition of a social media company.

Bloomberg’s anonymous source, however, had confirmed the terms weren’t certain, and the prospect of a no-deal remained on the table.  

The price action suggests PayPal shareholders weren’t very excited about the acquisition in the first place, as the stock jumped more than 4.0% on the news this morning.

Ark Invest’s analyst comments on the deal

Ahead of PayPal’s confirmation on Monday, Ark’s Invest’s Maximilian Friedrich agreed that the combination could have boosted sales for merchants and in-app shopping experience for users but had his reasons to question if spending such a hefty amount was justified.

PayPal already has the two key assets necessary to include commerce in its planned digital wallet; 371 million consumers and 32 million merchants. We are wondering, therefore, why PayPal would pay $45 billion and take on substantial execution risk to add consumers and merchants at the margin.

PayPal already spent $2.70 billion last month to buy Japan-based Paidy to expand its footprint in the rapidly growing “buy now, pay later” space.