Analysts Chime in on PayPal's Potential Pinterest Acquisition

Options volume on both securities has exploded today

Digital Content Manager
Oct 21, 2021 at 1:03 PM
facebook X logo linkedin


A report came out yesterday that online payments giant PayPal Holdings Inc (NASDAQ:PYPL) is in talks to acquire social media company Pinterest Inc (NYSE:PINS) in what could be the biggest tech deal of 2021. Those familiar with the matter said PayPal has offered to acquire Pinterest at $45 billion, or $70 per share, which initially sent PINS surging, adding 12.8% during yesterday's session, marking its biggest daily jump in nearly a year. However, both securities are cooling today as some analysts question the tech merger. 

Bernstein noted that it's struggling "to see compelling synergies and see meaningful execution risks to PinPay." Credit Suisse, meanwhile, said it's unclear on the rationale for the partnership. RBC Capital Markets had a different take, noting that PayPal's ambitions of becoming a "super app" could be realized with the help of a social media platform like Pinterest. 

Nevertheless, Pinterest stock is set to cut its seven-day win streak short today, last seen down 2.6% at $61.01. Yesterday's rally was met with resistance at the 180-day moving average, which briefly served as support back in July. The equity is still down 7.3% year-to-date, thanks in part to a post-earnings bear gap the stock suffered in late July. 

pins october 21

Meanwhile, PayPal stock is down 4.9% at $245.76, trading at its lowest level since May. The stock still sports a muted 5% year-to-date lead, but recently succumbed to pressure at the 140-day moving average, though the 320-day moving average still sits just below as a potentially supportive trendline. 

pypl oct 21

Both stocks are seeing a surge in options activity in response to yesterday's news. So far Pinterest stock has had 105,000 calls and 36,000 puts exchanged, which is triple the intraday average. The most popular contract is the weekly 10/22 63-strike call, followed by the 62-strike call in the same series. Positions are being sold to open at both, suggesting these traders expect limited upside for the underlying security by the time these contracts expire tomorrow. 

Over in PayPal's options pits, volume is running at seven times what's typically seen at this point, with 217,000 calls and 92,000 puts exchanged so far. The weekly 10/22 250-strike call is seeing the most action, followed by the 10/22 255-strike call in the same weekly series. Positions are being sold to open at both. 

 

Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on C3.ai calls
238.5% GAIN on Oracle calls

 
 
 


 
 

Rainmaker Ads CGI