We got a very clear sense of what investors think of the prospect that PayPal might buy Pinterest from how the two stocks reacted to news of deal talks between the companies, first reported by Bloomberg. PayPal stock dropped nearly 5%, slicing about $15 billion off the digital payment company’s market capitalization. Pinterest shares, conversely, rocketed 13%—adding $4.6 billion to the company’s value. In other words, this would be a fine deal for Pinterest. For PayPal, not so much.
No matter what the companies say if a deal is done—and there’ll be plenty of flowery rhetoric about synergies—this looks to be one of those combinations that doesn’t make a lot of sense, at least for the buyer. Yes, both companies have shopping at the heart of their businesses. But PayPal is a payments company, duh. Pinterest is an advertising-driven company, one whose user growth has been uneven. U.S. monthly active users fell in the second quarter, a decline that continued into July, the company has said.