Demand Media shares taking off

Wall Street insanity seems to be creeping back - as in valuing the Santa Monica-based content company at over $1 billion, based on the first day of trading. The stock is up around 35 percent, to $23. That number is certain to fall, but the early going suggests there's a lot of dumb money out there. From NY magazine:

The company's SEC filing revealed that it looked profitable only if it used a creative accounting strategy that spread the cost of creating "content" over five years, using the argument that its articles are evergreen, and of course advertisers will want to buy ads on "How Do I Manually Fill an Ointment Tube?" for years to come. Not all of the company's content is that foolish. But because it hasn't even been around for five years, even Business Insider's Henry Blodget pointed out that questionable accounting "makes the company 'profitable' when it's actually hemorrhaging cash."

By the way, the NYT Co. was apparently very close to buying Demand Media four years ago, but CEO Janet Robinson nixed the deal. That according to Rafat Ali, founder of paidContent (via Silicon Valley Insider)


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Mark Lacter
Mark Lacter created the LA Biz Observed blog in 2006. He posted until the day before his death on Nov. 13, 2013.
 
Mark Lacter, business writer and editor was 59
The multi-talented Mark Lacter
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