PayPal (tkr: PYPL) plans to acquire e-commerce rewards company Honey Science Corporation for approximately $4 billion. The deal is expected to close in Q1 2020 and is but another Fintech deal in a year rich with Fintech transactions.
PayPal plans to leverage Honey, legacy PayPal and Venmo as a payments triangle of sorts. Honey of course is known for its browser extension which enables shoppers to optimize their stored online coupons by automatically applying the coupon that will provide the greatest savings for a particular online transaction.
From a valuation standpoint, in the absence of Honey’s revenue and EBITDA figures we looked to social media as a proxy given that social media and payments go hand-in-hand as we wrote about earlier this year: “Social Payments or P2P on Steroids“. To this end, Facebook (tkr: FB) has an Enterprise Value (“EV”) of $552 billion and had 2.45 billion monthly active users (“MAUs”) as reported for the September quarter. This implies $225 of EV per MAU. Applying that same logic to Honey’s $4 billion enterprise value and approximate MAU count of more than 17 million implies EV per MAU of approximately $235. Click here to learn more about the transaction.