Based on the aggregated intelligence of 170,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, online media company Demand Media
With that in mind, let's take a closer look at Demand Media's business and see what CAPS investors are saying about the stock right now.
Demand Media facts
|Headquarters (Founded)||Santa Monica, Calif. (2006)|
|Market Cap||$1.78 billion|
|Industry||Internet software and services|
|Trailing-12-Month Revenue||$252.94 million|
Co-Founder/Chairman/CEO Richard Rosenblatt (since 2006)
CFO Charles Hilliard (since 2007)
|Return on Equity (Average, Past 2 Years)||(3.9%)|
|Cash/Debt||$32.34 million / $0|
Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.
On CAPS, 62% of the 45 members who have rated Demand Media believe the stock will underperform the S&P 500 going forward. These bears include All-Stars HollywoodDan and georcole, both of whom are ranked in the top 15% of our community.
Just last month, HollywoodDan made a stinging case against the stock: "Just have to hate a business model that has a bunch of rich [people] paying 'freelancers' a pathetic $15 a pop to make them even richer. Really dislike this company, and as a consumer do not trust their content."
Currently, Demand Media even sports a particularly lofty forward P/E of 55.0. That represents a clear premium to listed rivals AOL (14.5), Microsoft (9.2), and Yahoo! (18.0).
(Nasdaq: GOOG)doesn't like you, and you rely on Google for business, how much business are you going to do? Google is actively trying to keep people from these low quality sites because they are just that, low quality. If [Demand Media] actually raises the bar on the quality of their information, they will have to raise the amount of money that they pay to the authors. As it is, they only pay them something like $15.00 per article and pay it out over five years!! No wonder all they get is low quality junk. And if they pay out more for higher quality, how will they make money then?
I think the idea behind the company is good, but the execution is really bad.
What do you think about Demand Media, or any other stock for that matter? If you want to retire rich, you need to protect your portfolio from any undue risk. Staying away from dangerous stocks is crucial to securing your financial future, and on Motley Fool CAPS, thousands of investors are working every day to flag them. CAPS is 100% free, so get started!
Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Microsoft is a Motley Fool Inside Value pick, and Motley Fool Options has recommended a diagonal call position on it. Yahoo! is a Global Gains choice. Google is a selection of Inside Value and Rule Breakers. The Fool owns shares of Microsoft and Google. Try any of our Foolish newsletter services free for 30 days.
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