Feeding Frenzy

Three weeks ago, “someone” floated the idea of PayPal buying Pinterest. PYPL plunged 5% the next day (shedding the value of Under Armour) and the company then denied the rumors. Our thesis: PayPal’s management leaked the story as a trial balloon, and let it float away when the market threw up on the notion of PinPal (couldn’t resist).

PayPal should have had the courage of its convictions. Pinterest is a great product with a shitty business model, as evidenced by what feels like a desperate attempt to monetize with ads that pollute the platform. The asset here is not the business model or cash flow, but the 444 million people (nearly the population of the U.S. and Russia combined) who log on to Pinterest every month. The fat lady likely hasn’t sung: The asset is now 10% cheaper than it was pre-balloon.

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Πηγή: profgalloway.com

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