over 2 years ago • 3 mins
News broke this week that PayPal is thinking about buying social media platform Pinterest, along with a tasteful throw cushion that’ll really make its bedroom pop.
What does this mean?
PayPal has been trying to broaden its services recently, in a bid to keep up with trends toward both ecommerce and shoppable social media content. That’s led it to Pinterest, which the payments company reportedly wants to buy for $45 billion – 26% more than it was worth before the news dropped. That would make it the biggest tech deal of the year, and PayPal’s biggest purchase to date. And why not: PayPal’s share price has more than doubled since the start of 2020, meaning the company’s in a prime position to offer up its stock, rather than cash, as payment.
Why should I care?
The bigger picture: Is it a bird? Is it a plane?
Pinterest’s 380 million monthly active users can already buy products on the platform via payment platforms like Shopify. But if PayPal makes the deal, it’d be able to process and collect fees on all those orders itself. That’d bring PayPal one step closer to its goal of becoming a “super app” for shopping and finance – the American equivalent of China’s Alipay or WeChat.
For markets: Good for the goose, not the gander.
PayPal’s investors weren’t optimistic: they sent the company’s stock down 7% after the news broke. That could be because they’re nervous that the venture will distract from more important matters, or that PayPal will get tied up with the time-consuming and expensive exercise of content regulation. But for Pinterest, the deal might’ve come at just the right time: the company’s active user base has slumped post-lockdown, and its co-founder – who has overseen its growth since 2011 – announced his departure last week. Investors, then, might see this as just what the platform needs, which could be why they initially sent its shares up 13%.
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Three of America’s biggest airlines reported better-than-expected earnings earlier this week, sure, but they still have plenty of baggage they can claim as their own.
What does this mean?
Southwest Airlines, American Airlines, and United Airlines all posted revenue that beat analysts’ expectations – up 161%, 183%, and 211% respectively versus the same locked-down period last year. And those figures would’ve been higher too, if not for an August surge in the Delta variant that scared away plenty of would-be jetsetters. But Southwest, American, and United might not want to recline their seats and enjoy the ride just yet: ever-increasing fuel costs are still kicking them in the back, while a shortage of airline workers means there are only so many flights they can actually offer.
Why should I care?
For markets: The world’s a big place.
The air travel industry continues to be dogged by the impact of the pandemic, with an ETF that tracks everything from airports to aircraft manufacturers lagging the US stock market by 20% in the last six months. But United Airlines is keeping its cool: the airline specializes in international flights, which bring in more profit than the domestic flights its rivals rely on. And since the firm’s expecting that profitability gap to continue to grow, it’s doubling down: United Airlines said earlier in the week that it’s aiming to offer 10% more international flights next year.
The bigger picture: Work for us. Please.
Those labor shortages don’t look like they’re going away anytime soon: data out on Thursday showed that the number of Americans claiming unemployment benefits fell to the lowest level since before the pandemic last week, even as job openings remain at all-time highs. That suggests there are plenty of jobs to go around, there just aren’t enough jobseekers to fill them.
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