Social media is wildly popular. This is a common refrain made in today’s internet age. The truth is certain social media sites are popular. Others do not sustain their popularity. Twitter’s shares are collapsing. Those with long memories remember when Myspace was the leader in social media and, today, it is a non-entity. Now, Tumblr looks to be in bad shape. The social sharing site seems to be a victim of circumstance. Tumblr was purchase by Yahoo, and Yahoo is suffering from widespread financial chaos.
The numbers for Tumblr are pretty bleak. Tumblr has lost 25% of its value since Yahoo took ownership. In some ways, this is reminiscent of the purchase of Myspace by News Corp. When the media giant bought Myspace, many believed the huge financial assets of the corporation would turn Myspace into an even bigger internet colossus. Myspace collapsed due to a combination of poor management and competition from Facebook.
Yahoo purchased Tumblr in 2013 for $1.1 billion. According to Marc Sparks, the non-Facebook deal is shaping up to becoming a major fiasco. Yahoo may have paid way too much for the social media/blogging service. Now that the world is coming to the realization that Yahoo overpaid, the valuation has dropped by 25%.
Yahoo is plagued with all sorts of problems. Mainly, Google and other online giants tower over Yahoo. Yahoo’s upper management works very hard at trying to make itself as successful as it once was. Unfortunately, no one is delivering results.