Demand Media Pops On Open, Great News for Domain Industry

Wednesday, January 26th, 2011

Domain name company gets nice lift in initial public offering.

Shares in Demand Media (NYSE: DMD) have popped 40% on open to just over $23 a share after pricing yesterday at $17, above the anticipated range of $14-$16.

This is good news for the domain name industry. Demand Media owns domain name registrar eNom, parking company HotKeys, part of NameJet, and a large portfolio of domain names. It’s true that much of the company’s growth is coming from its content businesses such as eHow, but the underpinning and stable revenue base comes from domain names.

Demand Media pulled this off despite recent questions about its accounting practices as well as rumblings from Google that it will look into “content farms”, which many people say was a direct attack on Demand Media.

Public companies trade for larger multiples than private ones, which means the economics of acquisitions change. While Demand Media focuses on growing its eHow-like properties, don’t be surprised if it flirts with acquisitions of other domain registrars, parking companies, and more domain portfolio owners.

Further Reading:

  1. Demand Media Buys Demand.com
  2. In Demand (Part 2): How the Domain Business Can Benefit from Demand Media
  3. Demand Media Will Never Get Love from the Mainstream Media

5 Comments » - Posted in Uncategorized by

Comments

  1. Jeff Edelman
    January 26th, 2011 | 10:20 am

    With all the bad press that they have been getting, it’s pretty shocking that it would open with such a blast. Hopefully, they will start making some real money to justify the stock price. When their business starts generating some real profits, then it will be great news for the domain industry. Until then, it’s fair to be real skeptical at this surge in stock price. But certainly positive news.

  2. Ms Domainer
    January 26th, 2011 | 12:04 pm

    *

    Agree with Jeff: I’m skeptical, given that the Big G is gunning for such companies that are running low quality content farms.

    *

  3. Shaun
    January 26th, 2011 | 3:03 pm

    Congratulations, Demand Media. You’re Still Pretty Dumb:
    http://blogs.forbes.com/jeffbercovici/2011/01/26/congratulations-demand-media-youre-still-pretty-dumb/

    This pretty much sums up my opinion of this company.

  4. theo
    January 26th, 2011 | 4:41 pm

    Here today , gone tomorrow.
    Sounds maybe harsh. But when it comes to the stock market.. I think you have more control when you play poker…

  5. shell schemes
    January 27th, 2011 | 5:35 am

    agree with above comments, although is a positive sign nonetheless and main thing is they dont crash and burn as otherwise corporate world will just view dot com crash scenario
    if they can maintain value and grow, more chance banks etc. will view domains as a real asset class as they should already

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