This IPO Demands Your Attention

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

Demand Media (NYSE: DMD  ) is certainly in demand this morning, as the online content producer's IPO opened at $23.50 after pricing last night at a mere $17 a share. It also boosted the number of shares sold from 7.5 million to 8.9 million.

Demand Media may not be a widely recognized dot-com media mogul, but its portfolio of vertical websites attracts more than a whopping 100 million unique visitors a month. Armed with a growing army of freelancers, Demand populates its websites with timely content. Demand's properties include how-to website eHow, outdoor hiking guide hub, and the comedy site.

Demand's model isn't unique. Yahoo!'s (Nasdaq: YHOO  ) recently acquired Associated Content has an even larger base of freelancers, but Demand's vetted contributors are an ambitious lot. Demand has published more than 3 million articles and 200,000 videos. Beyond its own sites, Demand deploys its content through third-party sites including Gannett's (NYSE: GCI  )

It all adds up. Revenue climbed 17% to $198.5 million during 2009, and the growth has accelerated through 2010. The one rub here is that Demand has struggled to turn a profit, though it likely cleared an operating profit in its December quarter.

Demand isn't cheap. Today's pop will likely mean that underwriters go for the full over-allotment, giving it a healthy 82.6 million shares outstanding. In other words, the dot-com darling's market cap is just shy of $2 billion. Yahoo! shelled out just $100 million for Associated Content last year, though it reaches a much smaller audience.

The $2 billion sticker may just be a number, but it prices Demand in the same enterprise-value ballpark as established web giants AOL (NYSE: AOL  ) and IAC (Nasdaq: IACI  ) .

Demand is growing faster than both of those companies, but investors may want to wait and see if this seemingly scalable model can ever deliver consistent profitability at attractive margins.

Which private company would you like to see go public this year? Tell us all about it in the comment box below.

Yahoo! is a Motley Fool Global Gains recommendation. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Longtime Fool contributor Rick Munarriz is glad to see the IPO spigot flowing again. He does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.

Read/Post Comments (1) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1429540, ~/Articles/ArticleHandler.aspx, 10/28/2016 4:49:11 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 7 hours ago Sponsored by:
DOW 18,169.68 -29.65 -0.16%
S&P 500 2,133.04 -6.39 -0.30%
NASD 5,215.97 -34.29 -0.65%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

12/31/1969 7:00 PM
AOL.DL $0.00 Down +0.00 +0.00%
AOL CAPS Rating: *
GCI $8.21 Down -1.69 -17.07%
Gannett CAPS Rating: No stars
IAC $65.48 Down -0.78 -1.18%
IAC/InterActiveCor… CAPS Rating: *****
YHOO $41.87 Down -0.21 -0.50%
Yahoo CAPS Rating: **