Traders send Demand Media shares soaring on IPO

Successful CMOs achieve growth by leveraging technology. Join us for GrowthBeat Summit on June 1-2 in Boston, where we'll discuss how to merge creativity with technology to drive growth. Space is limited. Request your personal invitation here!

As of this writing, online publisher Demand Media is worth more on the stock market than is The New York Times Company. Of course, this says more about the enthusiasm of IPO investors than it does about the relative merits of the two organizations, but given the overall level of terribleness of Demand’s product –mainly hastily written how-to articles aimed not at readers, but at search engines – it’s still a bit disheartening.

In afternoon trading, Demand shares were up by 35 percent, to about $23, after reaching a high of $25. They priced this morning at $17, above their range of $14 to $16. After expenses, Demand raised about $67 million in the offering.

Apparently, a number of investors believe that Demand will somehow thrive despite the company’s raw exposure to the whims of Google, which recently said it means to crack down on spammy content like Demand’s (though it didn’t mention Demand by name). A change in Google’s search algorithm could send Demand’s content way down in search results, which would cut deeply into Demand’s traffic. That could happen at any time, in a heartbeat.

While the IPO is clearly a success, the Wall Street Journal‘s Deal Journal blog offers some perspective: the 20th largest tech IPO since Google’s 2004 market debut — that of Solera Holdings in 2007 — raised three times as much money as Demand did today.


VentureBeat’s VB Insight team is studying marketing analytics... Chime in here, and we’ll share the results.