Heads I Win, Part II
With all of that out of the way, perhaps $Pinterest(PINS.US$is a good company, and it's good for $PayPal(PYPL.US$. Well, on the surface, I like what I see here:
And, the user base is growing strongly, although Q2 2021 took a dip:
Here's more color on that drop:
The drop doesn't worry me too much. After all, Pinterest enjoyed a boost due to the stay-at-home, work-from-home effects of the pandemic. Furthermore, you can see the actual YoY numbers, quarter to quarter, and they are at least satisfactory.
For what it's worth, PINS CEO Benjamin Silbermann explains the drop off it quite well:
One, overall time at home has shifted. And two, a lot of the use cases that were especially relevant last year, things like redecorating your home, educating your kid at home, cooking meals at home, those have lessened. Now it's early to say how those will normalize over time. I wouldn't describe the current user behavior or the current social environment exactly the same, but we're seeing some promising early signs.
That perfectly lines up with my intuition as well. Moving on.
I'm also enjoying this data, properly broken out for inspection:
While I do care about the numbers, and the improvements over time, I'm more interested in what PYPL might see here. That is, users have value, because users are shopping and buying. Imagine if PYPL was able to push more e-commerce, or really any kind of transaction, through these users. Clearly, they spend money.
Consider the usage, adoption and general activity flow:
"If PayPal does buy Pinterest, the fintech gains a social media presence rivaling Instagram, bringing in highly engaged consumers and helping merchants sell products," said Julie Chariell, Bloomberg Intelligence senior fintech industry analyst. "PayPal has much to gain: Pinterest has 380 million monthly active users who use the app 37 times a month, compared with 80 million PayPal users who are active eight to nine times a month."
User activity is wonderful. Now, imagine how user activity isn't just looking at funny cat videos or pictures of the Grand Canyon. Instead, the activity on Pinterest is very heavy on browsing-to-buy, and literally shopping. I mean, that's almost entirely the point from what I gather. The data speaks volumes:
- Nearly 80% of U.S. Millennial women are on Pinterest.
- 4 in 5 U.S. moms have an active presence on Pinterest.
- Half of U.S. users are also using Pinterest to shop.
- Nearly 9 in 10 users are on Pinterest to plan purchases and find inspiration.
- 85% of users have made a purchase based on seeing a branded pin.
- 4 in 5 U.S. moms have an active presence on Pinterest.
- Half of U.S. users are also using Pinterest to shop.
- Nearly 9 in 10 users are on Pinterest to plan purchases and find inspiration.
- 85% of users have made a purchase based on seeing a branded pin.
And, PINS is looking to continue down the user monetization path.
"Pinterest has been intently focused on driving greater shoppability into its platform," and he notes that product inventory grew almost 50% in the second quarter "driven by Pinterest's Shopify partnership expansion."
And, I have heard plenty of people talk about PYPL's plans to expand their user base, since they have a relatively easy monetization path if they have the users. For example:
PayPal has over 400 million registered users, and they are the customers, but they're also the product going forward because PayPal also has over 30 million merchants on its platform and one of its main goals right now, it's trying to grow its user base, it's trying to get 750 million users by 2025. But it's trying to get them to transact more and more on the platform, that's why it's launching these new products and services like buy now, pay later; cryptocurrency; things like this. It wants to basically know all of the transactions, all the financial dealings of its consumers, because then it can take that data and give it to merchants.
I definitely see how PYPL could help take PINS social e-commerce to the next level, and even more effectively partner with $Shopify(SHOP.US$along the way. As I've said to several people now - I don't hate this deal, and that's usually a good sign.
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HuatAh88 : After today more people will download pinterest app in curiosity (like me, lol), to know more what it is capable of.
chrissssss_will OP HuatAh88 : Definitely. Social commerce. 1+1 > 2.
poorlydrawnmcyt : You are wise being your years:
...if the offer price goes up too much, I might have to revise my entire PYPL thesis. Poor capital allocation is deadly. I want a great deal, or no deal...
Stockaholic poorlydrawnmcyt : That comment stuck with me too. Right now I trust PayPal's management, but if they overpay I'll really have to rethink that.
Biotechmaster : Nice article. I agree: the only potential downfall I see is paying too much for PINS.
chrissssss_will OP Biotechmaster : I think this is the critical point. Right now, it’s rational and the numbers for PINS are favorable.
I’ll also point out that most PINS investors think PYPL would be getting PINS too cheaply. I’d say rough consensus of PINS investors is that it’s worth at least $80 to $85. That’s a good “tell” for PYPL investors.
Have a great day.
Joseph Dodd : When they over pay, and they will, it’ll still be worth buying.
chrissssss_will OP Joseph Dodd : A bump would likely be just fine. But, not much, or I’ll get grumpy.
yailea : What's to stop Microsoft from circling back with another offer? Paypal will have to raise their bid if they want $Pinterest (PINS.US)$.
chrissssss_will OP yailea : True, but only if:
1. Another bid comes in.
2. PINS rejects for some reason.
I'm quite curious about other bids or counteroffers.
I'm also not quite sure about the level of "hostility" here. Sounds like they are at least neutral, but I'm wondering if PINS is shocked or insulted?
Have a great day.
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