RBC issued an Equity Research Report today on Demand Media, Inc., the day after Demand Media, Inc, reported its second quarter earnings.
Demand Media announced during the earnings report and the earnings call that followed that Google’s Search algorithm continues to impact Demand’s owned and operated site traffic negatively and to a greater extent than captured in estimates.
Shares of Demand are down over 5% in early trading today at $6.21 as time of publication although they hit as low as $6.08.
The interesting part of the RBC report for me was this statement:
DMD’s registrar/(future) registry business:
We estimate the market is currently assigning a value of just ~$250mm for Demand Media’s Registrar business, when the potential value creation from the new gTLD initiative alone could be worth that much or more.
Hum
Demand Media, Inc. owns Enom the 2nd largest domain name registrar in the world and also owns owns the newly acquired Name.com for which Demand paid $18 Million for the newly acquired Name.com, seems like the $250MM valuation for the registrar business seems low.
The RBC report goes on to cite the 26 new gTLD’s which Demand Media applied for (22 which have passed ICANN Initial Evaluation) as the key positive factor for the entire company.
