Over the next two weeks, quiet periods will expire for a diverse group of companies that successfully completed IPOs last month.
Chief among them are online media platform operator Demand Media, Inc. (DMD), the largest Internet company to go public since Google (based on market value), and consumer behavior analysis company Nielsen Holdings B.V. (NLSN), the biggest PE-backed US IPO in at least ten years. Both listed on the NYSE on January 26 and have posted double-digit returns since their public market debuts. The quiet period for each stock is set to expire on March 7. Renaissance Capital has issued objective, in-depth Pre-IPO Research on both of these companies.
Since it was created in 2006, Demand Media (DMD) has grown rapidly to become a leading online content platform operator that uses over 13,000 freelance contributors to produce massive amounts of text and video. It strategically games Google's algorithms to determine what consumers want and tailors its articles to rank highly in search results. Some have expressed doubts over the long-term sustainability of Demand Media's business model, labeling the company a low-quality "content farm" and "Google parasite." Others are more optimistic, pointing to strong traffic trends (100 million+ monthly unique visitors) and increasing monetization of legacy content as early indications of its ability to generate attractive returns on its online content. In a sign of strong demand, the company priced an upsized deal at $17, above the initial $14 to $16 range, raising $151 million. The stock surged 33% to $21.85 on the first day of trading.
The Santa Monica, CA-based company also released fourth quarter results on Wednesday, slightly exceeding the preliminary estimates given in its SEC filings. It reported a 33% increase in revenue from the year-ago period to $74 million. Net income turned positive at $1 million, while discretionary cash flow, defined by management as CFO less property and equipment expenditures, was markedly higher at $16 million (+116% YoY). Shares are currently trading at $22, 29% above the offer price.
Nielsen Holdings (NLSN) is a more mature company with roots reaching as far back as the early 1920s. The well-known brand in consumer and media research was bought out for $10.1 billion in 2006 by a group of private equity investors that included KKR, Thomas H. Lee, Blackstone and Carlyle. Nielsen's two main segments comprise "What Consumers Buy," which provides consumer purchasing measurement and analytics for companies like Coca-Cola and Kraft, and "What Consumers Watch," which offers TV, online and mobile viewership data to companies like NBC, Google, WPP and AT&T. Nielsen has also performed well since its IPO, with its stock climbing 9% in its debut and another 3% in aftermarket trading. The company intends to announce full year 2010 results next Tuesday, March 1.
