Pinterest was founded in 2009 by the entrepreneurs Ben Silbermann, Evan Sharp and Paul Sciarra. It caught on quickly, with people flocking to it to “pin” images on home décor, weddings, travel destinations and many other topics. The company has said it has about 454 million users.
Pinterest went public in 2019, and over the last year its share price has risen 26 percent. Revenue increased nearly 50 percent in 2020 to $1.7 billion as the company’s user growth rose, fueled by people spending more time online in the pandemic.
Emily Anderson, a managing director at Union Square Advisors, an advisory firm not involved in the talks, said a deal with Pinterest could allow PayPal to gain more customers and lock them in, without having to lure them with advertising or partnerships.
“The concept is really owning an audience versus renting,” she said.
But Andrew Jeffrey, an analyst with Truist Financial, called the potential deal “an act of near desperation” that made “zero sense.” He said PayPal was struggling amid increased competition in its core business of facilitating digital payments.
Stripe, a start-up that offers payment services to businesses, has gained ground in recent years, reaching a private valuation of $95 billion. Square, a digital payments company led by Jack Dorsey, who is also Twitter’s chief executive, has also grown over the past two years as the pandemic helped propel a shift away from using cash.
PayPal and Square are both flush with capital and eager to make bold deals. This year, Square bought Tidal, the music streaming service, for nearly $300 million and Afterpay, a company offering installment payment services for online shoppers, for $29 billion. PayPal recently acquired Paidy, a Japanese provider of installment payment services, and iZettle, a Swedish payment processor.
While Pinterest’s business has also boomed in the pandemic, the company has faced a bruising year culturally. The company, whose customers are mostly women, has repeatedly grappled with lawsuits and allegations that it mistreated its female employees.