Stock investors need to pay less attention to Demand Media’s content business and more to its domain business.
If you ask most stock watchers, they’ll tell you Demand Media is a content company. The company, they’ll say, relies on driving eyeballs to its ad laden pages.
But underneath this is the truth: the “rock” of Demand Media is the domain name registrar and its huge portfolio of parked domain names.
When it announced quarterly earnings yesterday, the company reported a 20% hike in registrar revenue compared to the third quarter of 2010. It now has 12.2 million domains managed on its platform. That’s up from 10.6 million a year ago.
Make no mistake — Demand wants its content business to drive revenue increases. But investors should pay more attention to its domain name registrar business than they currently are. With new top level domains on the horizon, domain name registrars like eNom are well positioned. Not only will they realize a spike in registrations but they also have the clout to push registry providers for incentives to promote their domains.