What will Demand Media stock be at six months following their IPO date? That is a very important question that many employees and early investors are asking. That date is when they have their first opportunity to sell their shares.
In the past, many technology employees have become overnight millionaires once their firm went public but had worthless paper once they were able to sell their shares. Of course you have companies such as Google and Apple, where many employees did very well when their time came.
Let’s get back to Demand Media. The stock was one of the first high flying tech firms to go out this year. I can tell you that they threw an incredible party at Domainfest celebrating their IPO. Whats not to celebrate. They priced at $17 per share and hit a high over $27. Unfortunately what goes up, must come down. When Google made changes to their algorithm, some Demand sites suffered large traffic decreases. It must have put a scare into investors as the stock has been trading down each day. Today it hit an all time low of 13.99 during the trading day.
What will it be in 3 more months. My personal guess is under $10, which is a lot higher than I think it will be in 1-2 years.
I have heard it said, “The trend is your friend…”
The problem with DM is the lack of substance in their content. While the client base they have may have been satisfied with their fluffy, repetitious and pedestrian filler material, the search engines are not. The other issue is the payment model for the writers. No writer with their salt is going to write for Demand Media, because they don’t pay anywhere near enough to attract people willing to spend the time and energy it requires to “prove themselves” to DM, while DM’s alleged experts determine who can move to the next pay bracket or not. For that kind of nonsense, writers can freelance on their own sites and do far better.
Companies that are not profitable and growing tend to lose their IPO appeal quite rapidly, just dont see how this pos ever got to $27 based on very weak biz model to begin with.
if thats your guess simply buy a put on demand media and tell us all how much money you made. i saw a guy make 100k on one put in 1987
@ domain guy. It would not be ethical for me to short a stock that i wrote about negatively in this column.
@ don – i agree. Every internet bubble has investors trying to ride the wave only to come down crashing.