Here’s why I’m glad the PayPal-Pinterest acquisition failed
Anear the announcement of the news PayPal funds (NASDAQ: PYPL) no longer pursues the acquisition of Pinterest (NYSE: PINS), the latter’s shares plunged. However, not all investors are necessarily upset with the outcome. In this fool live Video clip, recorded on October 21, Fool.com contributor Matt Frankel explains to colleague Jason Hall why he wants to continue to own Pinterest shares in the future.
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Matt Frankel: I’ll give the Pinterest point of view here. I was a shareholder of Slack before it was acquired by Selling power (NYSE: CRM). I made a quick 30% bonus when they announced the acquisition. In this case, I was fine to take the money and deploy it in other opportunities. This is usually how I think of investments if I expect them to generate 12% to 15% annualized returns over the long term, if someone wants to come in and buy it back for more than stocks. not trading for now, I am generally happy to take the money and find other opportunities. There are 10,000 publicly traded stocks that I can find elsewhere to mine.
I don’t usually feel that way when the stock is vested, I feel like I have 10 bagging potential like I think Pinterest does, while your acquirer doesn’t. PayPal, no matter how successful Pinterest is under its banner, won’t be bagging 10 from here. It would be a $ 3 trillion business. Crazier things have happened, but Pinterest on its own could be a 10-bagger within a decade and that’s when I don’t like when my shares are vested, when it comes to from one growth dynamic to another.
Jason Hall: I also want to point out something else. Guys I’m going, I’m going to share a screen because I think that’s the one where the picture, I think that really says a lot. It’s not like Pinterest is running out of resources. Like I said, you see here in purple, in yellow. Purple generates $ 383 million in operating cash flow in the past 12 months, $ 374 million in free cash flow, $ 2 billion in cash on the books, and the company is debt free. It’s not like Pinterest is running out of the resources it needs to try and reinvest in growth. This is the thing for me. It’s so confusing, it leads me to think, someone on the inside is ready to sell the business, someone is ready to move on. This is the only thing I can understand.
Jason Hall owns shares of Pinterest. Matthew Frankel, CFP® owns shares of Pinterest. The Motley Fool owns stock and recommends PayPal Holdings, Pinterest, and Salesforce.com. The Motley Fool recommends the following options: $ 75 long calls in January 2022 on PayPal Holdings. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.