Microsoft Corp. at one point considered acquiring the social network Pinterest Inc., according to a report today in the Financial Times.

Pinterest had a market capitalization of about $51 billion prior to the publication of the report. The company’s stock price jumped more than 5% following the Financial Times’ scoop, after previously rising more than 600% since the start of the coronavirus pandemic. 

The paper, citing people familiar with the matter, said that Microsoft had approached Pinterest about an acquisition “in recent months.” One of the tipsters was citing as saying that the negotiations are currently not active. It’s unclear whether the talks were shelved completely or simply paused.

In any event, that Microsoft reportedly sought to buy Pinterest hints the company is actively looking to grow its share of the social media market and willing to invest billions of dollars to do so. Pinterest is not an entirely unexpected acquisition target. The recent surge in its share price would make the social network an expensive purchase, but it’s seeing impressive revenue growth that suggests a prospective buyer could still realize a return on investment. 

Pinterest’s sales surged 145% year-over-year, to $123 million, in the fourth quarter. The number of monthly active users on its platform and average revenue per user both easily topped the average analyst estimates. The company has plans to continue increasing sales in 2021 by expanding its presence in international markets. 

Pinterest makes money by enabling brands to display paid promotions next to users’ posts, or Pins, in its social network. Pinterest ads are especially popular with retail brands. According to the company, ads posted to its platform can provide double the return on investment of competitors. 

Besides a new, fast-growing advertising revenue stream, acquiring Pinterest would also buy Microsoft access to user data that it could potentially harness to enhance its own marketing solutions. Pinterest has more than 450 million users worldwide. In the event of an acquisition, the data the social network collects about consumer interests might help improve Microsoft’s search advertising platform, which is believed to have generated annual revenue of more than $7 billion as of 2019.

Yet another part of Microsoft’s business that might benefit from a potential Pinterest acquisition is Azure. The Financial Times report today noted that the social network currently hosts its back-end infrastructure on Amazon Web Services Inc.’s competing cloud. 

Microsoft previously acquired GitHub for $7.5 billion 2018. Two years earlier, the company paid $26 billion for LinkedIn. Microsoft’s most recent major push to expand its social media presence was last year when, teaming up with Walmart Inc., it made an attempt to buy the U.S., Canada, Australia and New Zealand operations of TikTok.

Photo: Microsoft Sweden/Flickr