PayPal is eyeing a $45B acquisition of Pinterest — does it make sense?

If Leonardo da Vinci had Pinterest (Souce: YouTube / Pinterest)

Most of us know Pinterest as the social media platform built around digital pinboards and images.

Soon, we may know it as part of one of the largest social M&A deals ever. PayPal — the $290B payments firm — is in talks to acquire Pinterest for $45B.

Does the deal make sense?

Pinterest has a large audience (454m users) that is primarily female and creates content for commerce-friendly verticals like fashion and home decor, according to Bloomberg.

Right now, the platform makes most of its money with ads, but it’s very under-monetized. By comparison, Facebook has 47x the revenue of Pinterest with only 6x as many users.

With resources and backing from PayPal, Pinterest could build on-platform ecommerce tools (think of how users make purchases within Instagram). PayPal would get a 2.9% payment fee on any transaction.

Another deal ‘synergy’ (can’t believe we used this word)

PayPal can encourage its 32m merchants to advertise on Pinterest. Why would Pinterest do the deal? Per The Motley Fool, the social platform has:

• Slowing revenue growth
• A shrinking domestic user base
• HR issues including its co-founder and chief creative officer recently leaving the firm

As long as no one touches this “dad jokes” pinboard, the deal sounds reasonable enough to us.