Description: The Covid crisis has been good for business at PayPal as consumers have used the online payments firm to process transactions during the boom in e-commerce during the lockdowns. Now comes word that the payments processor has an interest in Pinterest in a bid to enter the social media space. PayPal’s offer of $45 billion is priced at a premium of over 25% of Pinterest’s current valuation.
Date: October 20, 2021
1) Have you used either Paypal or Pinterest? How about your classmates?
2) How does Pinterest generate its revenue?
3) Illustration 12-4 in Wiley’s Financial Accounting: Tools for Business Decision-Making discusses three accounting guidelines for strategic investments. Which scenario do you think Paypal would find applicable to the acquisition of Pinterest?