What Price Tumblr?

Yahoo bought Tumblr for $1.1 billion back in 2013, then wrote down its value by $230 million in 2016. Shortly after that, Yahoo warned that the “goodwill” portion of Tumblr’s acquisition value—$750 million—might be partly or altogether “impaired.” Verizon closed on the purchase of Yahoo in 2017 for $4.48 billion (discounting their 2016 offer by $350 million after Yahoo’s data breach scandal); Yahoo’s assets were combined with AOL’s (purchased in 2015 for $4.4 billion) into Oath. Then at the end of 2018, Verizon wrote down the value of Oath by $4.6 billion.

Tumblr’s last public revenue announcement was $13 million for 2012. An annual revenue goal of $100 million, taken up in turn by Yahoo, was never achieved as far as anyone says. Neither Yahoo nor Verizon broke out Tumblr revenue since, and external estimates don’t think it’s gone up much. User numbers did grow through the acquisitions, until a huge chunk abandoned the platform over the porn ban.

And so in the fullness of time we arrive at the present dilemma, where it became known last month that Verizon is seeking a buyer for Tumblr. Erstwhile adult content purveyor Pornhub claimed to be interested, and that match does make a kind of sense; but it seems likely that the interest was mostly a PR stunt, and Pornhub’s privately owned parent company may not be liquid enough (ahem) to afford an acquisition anyway.

But how much would anyone pay for Tumblr, in its present state? Normally you could somewhat isolate that question from “why would anyone buy Tumblr,” but in this case the why almost exclusively determines the how much.

It seems like there are three possible futures in store for Tumblr. One, a white knight who wants to do something meaningful with the platform and is willing to eat the loss until their plans bear fruit. Two, fire sale purchase by a Bryan Goldberg type who will rip up Tumblr to the foundations and operate it on life support for a marginal profit for as long as practical. (Normally there would be a private-equity-style corollary of lowball purchase followed by crushing Tumblr to a small cube of notional profitability for resale to someone else, but I don’t think there’s any secondary or tertiary market for such a thing.) Third, Verizon shuts it down.

I have a great deal of personal, positive sentiment for Tumblr and I hope it does somehow survive. Given all the history it seems difficult to imagine anyone paying more than $100 million, barring any non-public positive factors. Maybe even less? Verizon will be looking for an exit that at least helps them cover the costs of separation and wind-down. There’s probably no chance of a non-embarrassing price at this point. It’s going to be a cringey discount off the price paid, though Verizon can blame Marissa Mayer for paying an inflated number when Yahoo bought Tumblr for that tasty billion dollars. Mayer was Tumblr’s original white knight, since the Tumblr deal was her big statement acquisition to inaugurate her tenure at Yahoo—incidentally rescuing Tumblr from likely insolvency and a much worse position to find another buyer.

(Everyone reading this likely knows already, but as a tardy disclosure statement: I worked at Tumblr for a year right up to the Yahoo acquisition, and made a little money—nothing life-changing—from the Yahoo deal. Thanks Marissa.)

A low (“low”) number of $100 million or less puts Tumblr in reach of all kinds of characters, with all kinds of intentions. That alone makes it a crap shoot, but it’s also going to be a weird proposition on the merits. Who wants another platform at this point? Especially a platform with all kinds of baggage? It’s going to be hard to line up investors for something that doesn’t seem likely to pay off anytime soon.

As a universally beloved character and minor footnote from Tumblr’s golden age, I would of course be glad to assist potential acquirers with their Tumblr plans. I got all kinds of exciting ideas about content, audience, product, brand, marketing, monetization, memes, you name it. I even got logo ideas! And I can snugly fit into your $100 million budget.

Original concept art + final logo, Tumblr Department of Editorial