I wrote about why Yahoo wanted to buy Tumblr, and the risks for both:
But of course there will be challenges — few billion-dollar deals win universal praise from the outset, and investors have more than earned the right to be skeptical of Yahoo’s big acquisitions. So far, though, they’re backing Mayer’s grand strategy — Yahoo’s stock is up 70 percent since she took over. If Tumblr continues to grow and Yahoo succeeds in turning it into a platform for native advertising, today’s $1.1 billion could someday look like a bargain. But that day is still a long way away.