Hey everyone kevin here, so news just came across that paypal is considering buying pinterest. Now pinterest went up as high as 19 of the news vacillating around 10 to 13. Right now, who knows maybe he'll bleed out more, but the discussions are rumored to be taking place around 70 per share for pinterest now paypal shares are down, obviously, because paypal doesn't have 40 billion dollars in cash, so they'd have to either sell shares or just issue Shares to paypal or pinterest shareholders to make this deal happen. Hence why paypal is selling off a little bit, not necessarily that paypal shareholders.

Don't like this idea. It's just it's dilutive, now, paypal for what it's worth is looking at pins as a profitable company, pence's expected to be potentially as much as 700 million dollars in the green by the end of this year, as we like to say in the black, in accounting, profitable. So they're not losing money anymore, they could be seeing revenue as high as a billion dollars next year on bottom line, so net revenue - or, i should just say - net income of a billion dollars by next year and potentially two billion dollars of net income by 2025. At 70 per share, once you count all the classes of shares, you're, probably looking at paying close to 45 billion dollars for pinterest and the acquisition rumors, which have not been confirmed by either pinterest employees or paypal employees.

It has a lot of folks scratching their heads. There is a lot of focus from paypal right now on the online shopping boom. We know that the pandemic has accelerated folks transitioning to uh online shopping and becoming more familiar and used to shopping online rather than going to brick and mortar uh. This is this news.

Is also by the way, helping etsy uh pump up, and that's probably because of an endorsement by paypal into the online shopping movement right before the holiday season. It's worth noting that paypal has been doing a lot to really try to either get access to our data or make our lives easier when it comes to online shopping. Consider that paypal bought honey, the checkout coupon finder for four billion dollars, so recently, paypal also bought paidi. A japanese buy now pay later platform.

Paypal does offer buy in four buy now pay later, although i haven't seen specific longer term zero percent financing kind of like the way a firm does in partnership with other companies, i'm a little surprised that paypal would be interested in paying 45 billion dollars for pinterest, Where we've seen user growth missed, estimate, miss estimates in a quarter, two, a slowdown coming out of the pandemic last two times that pinterest has reported earnings. The stock fell about 10 percent. The stock has been one of my. Unfortunately, recent losers, uh and uh.

That's it's been one of the stocks where i've been looking at it like huh, it's just one of these days. It's got ta bounce back, it's like come on wake up and do something. And finally, i mean we have a bounce here on this paypal news, but this could be fleeting. This rumor could also disappear quite frankly, uh this uh.

This deal might not come together at all, but when we search for hints as to why paypal might be doing this, it helps to just kind of think for a moment. Okay, so pinterest has sold down which makes them more attractive. They are profitable and their stock has been falling. They had a peak in february, they've been falling since then part of it has to do with user growth, slowing down the co-founder stepping down acquisitions or i'm sorry, accusations of discrimination by women inside the firm and uh and overall, potentially uh.

A favor of companies like etsy over pinterest, though i have to say in just anecdotal conversations with vendors. There are a lot of vendors who seem to think that pinterest has a higher conversion rate for ads compared to companies like facebook or even google. Uh, google, ads and - and this makes sense for facebook, especially since the uh apple, iphone changes for what kind of data facebook is able to track and use for advertising from, for example, iphone users where somebody with an account on pinterest might be able to have a Lot more of a customized algorithm. I personally have found a pinterest algorithm, very, very quick to adapt almost somewhat addicting.

Pinterest has recently had its website traffic, finally u-turn from a declining trend to an increasing trend in august as pinterest introduced and finally implemented, because they started talking about this back in may, but finally implemented the ideas pins. Now i'm not too familiar with idea pins, but it does seem like idea. Pins are an opportunity for creators to pitch products and integrate products into recipes and instructions and create videos and voiceovers and music so really trying to build up a creator. Experience with shopping, which is pretty smart because then you could follow not just uh topics, but also creators and uh, and immediately buy what somebody else is buying.

Quite frankly, i think that youtube should do things like this. Like i, i wish you you'd be able to just like click here and buy this this dagger, this runescape dagger, off etsy, right uh, you know that'd be kind of cool. If i held this up and all of a sudden below here, there was a button or on screen, you just click the button and you can buy this or below there's a little icon that lets you check out for this. You know dragon medium helmet that i got 3d printed right so uh.

I think those things would be very cool and very smart for an improved online shopping experience, and i think pinterest is, is an avenue for making that happen. Now. Paypal doesn't have doesn't really have like an e-commerce store right. They show up as the checkout option on other people's websites or domains or whatever, and uh paypal obviously wants to process as many transactions as possible.

If they do buy now pay later, they take the transaction. If you pay with paypal, they take a transaction cut. If you know somebody's checking out with honey, even if they're, not checking out with paypal, paypal can track where you're spending. Why you're spending what your habits are.

They can cater their algorithms to try to figure out. Where are customers? Who knows it's entirely possible, and this is just speculation, but it's entirely possible that paypal acquired honey realized. A lot of people were discovering these random merchant websites through uh, pinterest and and that they're actually seeing wow wait a minute. We can now track people go from pinterest to e-commerce stores of whatever companies and then they're they're, trying to use honey for coupons or whatnot.

Why why not potentially try to take control of the pinterest platform because see here's what happens if you get merchant platforms that have that you know anybody can use honey right because that's just uh, that's just a browser plug-in that you click on and then it looks For coupons right, so the merchant doesn't actually have to put a honey button on their website, but in order to have paypal, the merchant would have to agree to put paypal as a checkout option on their website, which paypal by the way, is an option for my Programs on building your wealth link down below where you can get 29. I'm sorry, you can still get 41 percent off using coupon code diamond hands all the way through uh october 29th, when the price goes up, but there is a paypal option and you can pay in four with paypal by the way, but anyway uh with paypal. You actually have to have a merchant that's willing to go out of their way to integrate paypal, which i did and one of the interesting things about acquiring pinterest potentially, is that if merchants are advertising on pinterest and now they're working with a paypal company, maybe one Could imagine that there would either be an incentive or probably not a requirement, but but some sort of uh inducement to hey if you're gon na advertise on pinterest owned by paypal? Why not also click this button and enable paypal checkout on your store it? It is basically, i think that i don't really think that paypal really wants pinterest. I think they want more checkouts using paypal and if they can use pinterest as the trojan horse for getting more checkouts with paypal, because now they're in conversation with merchants who are advertising? Who are spending money for more business and paypal is like hey, you know, while you're spending money for more business, you know we could save you fees by switching to paypal as well as 15 minutes, i'm just kidding uh but anyway um.

It's interesting to me. Now one thing that a course member pointed out which i thought was also fascinating - i'm gon na put it up on screen here, take a look at this, so uh: here's a product, product manager, checkout integration, career opportunity at paypal and here's the description. The branded experience team with which is the core payment business at paypal, is looking for a talented, ambitious and self-motivated product manager to own and drive paypal's checkout selection of products. So that's interesting.

Selecting products where paypal is maybe going to offer buy now pay later, like a firm does right, you will play a key role in crafting the buyer experience for online shoppers all the way. This is interesting from discovery pinterest to selection of payment methods, honey and paypal. To completion of their shopping experience using paypal or various product offerings buy now pay later, you will be responsible for building these experiences for paypal's core markets and emerging markets, if you're eager to shape the future of commerce globally, whether it's web or mobile, and have a Proven track record of launching successful products at scale at scale. We have a role for you.

It seems expensive, though i mean paypal is paying. You know paypal paying 45 billion dollars for pinterest when paypal's market cap uh is sitting at 304 billion dollars, 45 divided by 304 ish. That's about 14.7 percent about 14.7 percent of paypal's market cap going to pay for paypal, and we don't know if it's for sure. Yet but uh, if we look at it the way i feel like we just had a conversation about it, it kind of makes sense and pinterest has some big growth in it.

It's kind of a sexy, newer company, it went public in 2019. You've got a growth rate of like 50 percent and 20 20, like 80 80 in 2020, uh to 50 in 2021, probably between 20 and 30 percent in in the years going forward. They're still going to grow, maybe not as fast as other people think but they're still growing, uh and you've also got uh paypal, which has a pretty strong growth rate. You know 19 20 21, pretty strong for what is a relatively mature company but uh this.

This could be that sax appeal that really expands paypal into a completely different market. I mean really, you have potentially thousands of hostage advertising vendors that aren't using paypal who now might be tempted to use paypal. It's smart. I don't know about the numbers paypal's going down in my opinion again, not because uh, you know, paypal and investors are like this is stupid.

I think it's more because again it's dilutive uh to the shares that you own at paypal and - and i mean you would be getting an asset in return. But you know, people who are in paypal may not have bought pinterest and maybe aren't convinced yet so sure it balances out. It's like hey we're going to issue 45 billion dollars in more shares, but we're going to get an asset, that's 45 billion more. It should balance out, but as a percentage of of uh of the float uh, that's available, you're you're, going to be increasing.

The percentage of paypal shares outstanding, uh and uh and available for trading, and that usually leads stock prices to go down, even though it should even out on the accounting side. So there probably is some element of uh some paypal investors being a little spooked by this and confused by this. But i i think i can see it again. We don't have an official statement yet from the companies, but i think i'm gon na wrap my head around it.

I actually don't think it's that terrible. So anyway, there you have my thoughts on paypal. Pinterest. Would i buy paypal? Maybe maybe i i i i'm not convinced, but maybe maybe it would make sense to potentially sell some puts on paypal uh, since it's going down uh.

I also have because look if the deal falls through the stock will go up if the deal goes through uh. Maybe there'll still be some downward pressure for paypal, but it's an interesting long play and it might make sense to try to back door into paypal with some sold puts, especially on a potential elevated day of volatility like today. I also am down on call options on paypal, i'm sorry on on pinterest and if they converted to paypal options, i don't know that i'd be upset. You know, i'm, let's put it this way.

I'm intrigued, i'm not convinced all right folks. Thank you. So much for watching we'll see you in the next video check out this program's link down below, subscribe and share. If you found this helpful and we'll see in the next one, you.