After acquiring numerous companies over the years, tech giant Microsoft continues to work on its expansion strategy through the acquisition of more online companies. According to Financial Times, Microsoft had been in talks in recent months to buy the image sharing and social media service Pinterest for $51 billion.
Talks “Currently Not Active”
If the deal possibly closes, it will be Microsoft’s largest acquisition to date. However, FT reported that the discussion between the two companies is not currently active, pointing out that Pinterest previously showed its preference of operating as an independent firm.
Pinterest – Growth
Founded in 2009, Pinterest caught the online world’s attention owing to its innovative solution for discovering information using internet images, animated GIFs, and videos. Users can “pin” the images and videos that are relevant to their lifestyles. It is mostly used for home décor, food, clothes, and birthday ideas.
The pandemic was a blessing in disguise for the social service, skyrocketing its value over 600% as people stayed more at home spending more time online. Pinterest revealed last week that it gained 100 million new users in 2020 while the monthly active users increased to 459 million in the fourth quarter.
Fourth Quarter Results
Year-over-year quarterly revenue surged 76%, reaching a revenue of $706 million for the quarter. Earnings per share also topped forecasts for the quarter soaring to 43 cents, beating the 32 cents estimate to represent a 34% upside.
Microsoft’s Buying Binge
Microsoft has been on a buying spree in recent years. In 2016, it bought the professional social networking site LinkedIn for a whopping $26 billion. It also purchased the online game Minecraft that crossed 131 million users last year and the software developer GitHub. Last year, it acquired the video gaming company ZeniMax for $7.5 billion.
The entire global business of the Chinese video-sharing social networking service TikTok was also targeted by Microsoft last year. Unfortunately, Oracle and Walmart beat Microsoft and secured a deal to acquire TikTok’s US operations. However, reports suggest that the deal has been pushed backed indefinitely as Joe Biden’s administration reviews efforts to deal with possible security risks caused by Chinese tech firms.
The Redmond, Washington-based Microsoft clearly is on a pursuit of acquisitions to gather a portfolio of active online communities that could run on its Azure cloud computing platform. Pinterest currently runs on Amazon’s cloud computing platform, Amazon Web Services (AWS), which dominates the market. Through purchasing online firms like Pinterest, the Windows maker could draw in more Azure customers.
While Pinterest’s jumping stock price is good news for the social firm, it could possibly be bad news for Microsoft. The deal would likely draw in scrutiny from antitrust regulators.
Microsoft shares closed 0.4% down at $242.82 Wednesday while slipping 0.4% in the after-hours session. On the other hand, Pinterest shares closed 2.15% up at $81.12 while falling 0.15% in the after-hours session.
The addition of Pinterest to Microsoft would certainly prove to be valuable. However, there are no confirmations regarding the developments on the deal yet.