SIGNATURE WORK
CONFERENCE & EXHIBITION 2022

Increased competition in the fintech industry has forced PayPal to rethink its business model. More specifically, the San José-based company aims at replicating what We Chat and Alipay have successfully done in China by building an ecosystem in which users can have access to different services. In order to shift away from a payment platform to a digital commerce gateway, PayPal has been pursuing multiple strategic acquisitions that can help the company expand its services as well as its international market share. One merger deal that attracted particular attention from media and investors was the proposed acquisition of the social media Pinterest, which was later called off after investors negatively reacted to the stock market. This paper argues that PayPal’s shareholders missed a unique opportunity to create value. We will use a discounted cash flow analysis to estimate whether PayPal’s earning per share would have increased or not after merging with Pinterest.