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Demand Media IPO priced at $17 a share, above expectations

Investor interest is strong enough to lift the deal to 8.9 million shares, valuing the Santa Monica company at about $1.5 billion.

January 26, 2011|By Alex Pham, Los Angeles Times

Demand Media Inc., the Santa Monica company that is often derided as a content farm, is about to harvest a bumper crop.

The company Tuesday priced its initial stock public offering at $17 a share, valuing the company at about $1.5 billion.

Demand Media initially expected to sell 7.5 million shares at $14 to $16 a share, but investor interest was strong enough to lift the deal to 8.9 million shares at $17 each.

"It's generally positive when deals price above their range," said Ben Holmes, an IPO analyst with Morningnotes.com in Boulder, Colo. "There were more buyers than sellers, and they had more orders for shares than they expected."

Demand Media is the second IPO of the year and the first technology offering.

Demand Media lost $3 million on $179 million in revenue for the first nine months of 2010. The company doesn't command much respect among the journalism elite, many of whom disdain Demand Media's approach. Its freelancers are paid around $20 for each article or video on a variety of topics most likely to lure traffic from search engines, such as how to fold a paper airplane or how to start a compost pile.

alex.pham@latimes.com

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