Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of web-property owner Demand Media
So what: Demand's first quarter came up aces. Revenue excluding traffic-acquisition costs was up 50% to $76 million on a 77% gain in content and media revenue. On a non-GAAP basis -- that is, excluding items such as stock-based compensation and amortization of intangibles -- Demand reported earnings per share of $0.06, which doubled last year's $0.03 tally. Analysts were looking for $0.04 in per-share profit on $69 million in revenue.
Now what: The results have to be somewhat of a relief to Demand shareholders, after worries that a search-algorithm overhaul by Google
When it comes to the investment prospects of Demand's stock, you can count this Fool among the naysayers. With an underwhelming business model and a lofty valuation, I think there are much better places for investors to look.
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