Has Google’s Panda Update Hurt Demand Media Stock?
As previously reported, Demand Media’s eHow, which escaped the wrath of the U.S. version of Google’s Panda update, to actually gain search visibility, appears to have been nailed as the update rolled out globally and Google made further updates in the U.S.
Google has said it is using signals from its domain-blocking features in “high confidence” situations. Given that eHow is often the subject of complaints from people concerned with search quality (whether or not you find this justified), it seems fairly plausible that it was a commonly blocked site, especially when you consider how high it has ranked on numerous queries.
Today, Demand Media’s stock is down -1.36 (-6.32%) to 20.17 a share, at the time of this writing.
Tim Chen, a former hedge fund analyst and CEO of NerdWallet, writes in a SeekingAlpha article, “Demand Media disclosed in their recent 10-K that 25% of 2010 annual revenues ($241 million) were from eHow and that 65% of eHow’s page view traffic came from Google searches…To add a wrinkle to the equation, it also turns out that the average that implies ~$41 million of revenue is at risk, or a $16.4 million revenue impact, assuming a 40% decline in Google search traffic.”
Today, Demand Media announced that it will be reporting its first quarter 2011 financial results on May 5.
We have yet to receive comment from Demand Media on the subject of Google’s algorithm update.