Demand Media IPO prospectus values company at $1.24 billion
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Demand Media, the Santa Monica-based mass producer of Web content, filed to raise up to $138 million from the sale of 7.5 million shares of the company in an initial public offering Jan. 25.
The offering, expected to be the first IPO of 2011, pegs the company’s market capitalization at $1.24 billion, should the shares succeed in trading within the $14 to $16 range targeted by its underwriters, Goldman Sachs Group and Morgan Stanley.
In its prospectus filed Wednesday with the U.S. Securities and Exchange Commission, Demand Media said it posted $3 million in losses from $179 million in revenue for the first nine months of 2010, compared with a $30-million net loss from $198 million in revenue for all of 2009. You can read more about the company from its filing.
Demand Media has a topsy turvy reputation among the journalism elite, many of whom regard the company’s approach as the industry equivalent of fast food. But among investors, Demand Media enjoys a reputation as one of the few content producers with an attractive business model and financial promise.
The company has a network of 13,000 freelancers who produce hundreds of thousands of articles and videos for sites such as eHow on evergreen topics such as how to keep rain from flooding one’s backyard or how to throw a baseball. Freelancers are paid based on how much Demand Media expects it can get in advertising revenue from the articles or videos, generally between $10 and $20 apiece.
-- Alex Pham