Investors Overvalue Demand Media in Initial Public Offering

After pricing its shares at $17 last night, Demand Media went public this morning with an initial public offering. After only a few hours on the market, Demand Media, Inc. (DMD) was trading at $25 a share -- it's since fallen to the $23 per share range, but that is still considerably higher than was anticipated. With 8.9 million shares available, trading in that range puts the company's market cap near $2 billion, more than that of the New York Times and in the same general ballpark as IAC and AOL, two big (and established) players in the digital space. That's as crazy as it sounds.

Nicholas Jackson