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by jusben1369
4774 days ago
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One must never look at this deal based on the acquired's metrics and dynamics. One must look at this based on the impact of the acquirer. Instagram was worth $1 billion as it was potentially a $10 billion reduction in FB's valuation at IPO with this threat hanging out there. Tumblr is worth a billion because of the strategic value to Yahoo. In this particular case Yahoo can close massive gaps in age demographics and mobile in one fell swoop. Tumblr was discussing ad revenue of $100 mil this year. Yahoo, with much deeper experience and relationships here, can probably do much better than that this year and beyond. So it may "pay for itself" within 3 - 5 years which is nice on top of all the other benefits. Yahoo could monkey around and try and pick it up in a "fire sale" in 12 months for $500 mil. But maybe that never happens and they still wake up tomorrow well behind in the youth and mobile demographic. I love that Yahoo, after sooo many years of indecisiveness, is being decisive and bold. Not sure if it'll pay off but these seem to be well thought out calculated risks. |
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But weren't there other reports that they were going to hit 15M instead? Whoops. If they had 100M revenue, they wouldn't me needing to raise more cash; their burn is far smaller.