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Demand Media Spikes As Goldman Ups Rating To Buy from Neutral

Monahan contends the stock has over-reacted to the impact of recent changes in Google’s search algorithm that were designed to reduce the prominence of lower quality content sites in search results. The analyst contends the move likely will have a single-digit impact to the company’s earnings, but has resulted in a 40% drop in the stock price since mid-April, leaving the stock 20% below its IPO price. He contends the recent price of the shares “reflects future negative changes that are unlikely to materialize.”

Senh: Interesting that the one site that Google supposedly targeted with their previous algorithm has almost no effect on the site's traffic.

 

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