Can Marissa Meyer Really Make the Tumblr Acquisition Profitable ?

Marissa Meyer headed Yahoo! will purchase Tumblr in an all-cash transaction for $1.1 billion. Tumblr would continue to operate largely independently. While we believe such a valuation is high, we believe the combination of Tumblr’s growing usage and Yahoo!’s ad technology present an opportunity to improve user monetization over time.

Tumblr should contribute meaningfully to user engagement for Yahoo!; the site had over 116M desktop unique visitors in April (+85% Y/Y, comScore). Tumblr should also bolster Yahoo!’s position in mobile, as its 14.5 million mobile unique visitors in the US (+227% Y/Y, comScore) give Yahoo! a large and rapidly growing mobile audience. (more…)