Yahoo does it again...overpays for "Cool"

It seems that Marissa Mayer has again decided to waste investors funds

1.1 billion for Tumblr??? To pay that amount of money for a company that earned a grand total of $13 million in REVENUE last year (That's not EBITDA, but REVENUE) is a bit much.

Lets look at the figures. Based on that revenue figure, and assuming a EBITDA ratio the same as LinkedIN of 14% (a generous assumption to say the least) that would be EDITDA of $1.8 million

So a valuation of 1.1 Billion would be an EBITDA multiple of 604! Consider LinkedIN again, which is trading at EDITBA multiple of 140 of current EBITDA (which a lot of people also say is overvalued)

If we use that muliple and add a 50% growth premium on the EBITDA multiple for a new company (another generous assumption), lets see what Tumblr should be valued at if the multiple was 210. Based on that, the valuation of Tumblr should be $382 million...a more reasonable figure for a growth company.

But maybe I'm wrong. Maybe Marissa sees something that alludes me. But I can't see Yahoo getting a lot of return on this investment.

Note: Not a recommendation to invest/not invest with Yahoo. See Financial advisor etc.

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