Yahoo! Inc. (YHOO)’s Acquisition of Tumblr was a Failure?

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Last year, Yahoo! Inc. (NASDAQ:YHOO) spent around $1 billion to acquire famous blogging platform Tumblr. At the same time, Facebook Inc (NASDAQ:FB) bought Instagram for about the same price. But the results have shown that Yahoo! Inc. (NASDAQ:YHOO)  has messed up pretty badly in its acquisition of Tumblr as compared to Facebook. eMarketer has published a report according to which,  Tumblr’s user base is growing, but the rate is slowing. According to the report, Tumblr’s user base went up 46.2% last year in the U.S., and it will be around 24.8% by the end of 2014.

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The report said that the growth will deplete by half in 2015 keeping in view the trends. CNBC’s Julia Boorstin mentioned this study by eMarketer in a program and said that Yahoo! Inc. (NASDAQ:YHOO)’s acquisition of Tumblr is nowhere around Facebook Inc (NASDAQ:FB)’s success in its acquisition of Instagram.

eMarketer also mentioned some positive points about Tumblr’s growth. According to the report, Yahoo! Inc. (NASDAQ:YHOO)’s blogging platform has a user base mostly of young visitors. More than half of Tumblr’s users are aged between 18 to 24. This data shows that Tumblr is successful in getting the attention of the youth, which is the paramount factor of modern blogging platforms’ growth. The report also mentioned that users all around the world can view Tumblr’s blogs without signing in. This can have a bad effect on the marketing aspects of the blogging platform because marketers don’t get sufficient user data to target ads and promotional content. Boorstin also said that Yahoo’s growth in the market is declining whereas Facebook Inc (NASDAQ:FB)’s growth is increasing.

Dennis Berman of The Wall Street Journal said that Yahoo! Inc. (NASDAQ:YHOO)’s acquisition of Tumblr has not paid off and it was practically a failure for the company.

David E. Shaw  is one of the biggest shareholders of Yahoo! Inc. (NASDAQ:YHOO) having 16,192,611 shares of the company.

Disclosure: None

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