Investor sentiment towards Media IPOs
Google has accused Microsoft of “copycatting” its search results. However, following the recent high profile floatation of Demand Media, it might be worth asking whether Google should instead focus on diverting its algorithm from picking up unedited content from so called “content farms,” rather than allege espionage. Today we look at investor sentiment in Google Inc (NASDAQ:GOOG), Microsoft Corp (NASDAQ:MSFT), Demand Media Inc (NYSE:DMD) and Nielsen Holdings NV (NYSE:NLSN).
The dilemma faced by search engines today is whether or not content farms should be filtered or restricted from search results. Google is reported to be focused on eradicating content farm articles from its search results in 2011. However, many question whether this restriction defies the core freedom of the World Wide Web.
On searching “how to cook a turkey.” my preference is to take a recipe from a specialist site. For that, however I must scroll past those search results which promote themselves as a portal for you to “learn how to do just about anything.” The bold and aggressive business model that pays “freelancers” to write content (with no quality control) whilst generating revenue from advertising is proving a success. Witness: Demand Media (through its eHow business), which has just floated with a market capitalization of USD 1.7bn. Turning towards investor sentiment in its first week of trading, we see that 1.5% of the total shares outstanding on loan are already available to be borrowed and 1.3% of total shares outstanding are currently on loan. This will be an interesting stock to follow as markets try to determine if the business is here to stay, or whether its dependence on search engines will be its downfall.
Google’s invasion by content farms has created a gap in the market for search engines such as Blekko, which exclude materials from content farms, but there is also a growing view that Twitter is evolving into the ultimate real-time search engine.
The tech blogs are busy with opinions and updates on the accusation made by Google against Microsoft’s search engine, Bing. Microsoft has apparently said that it uses “clickstream data,” but has stopped short of confirming Google’s suspicions. Presenting a copy-cat culture at Microsoft would not bode well, but the immense scale and diversification of both online giants means this spat probably wouldn’t even create a ripple when considering investor sentiment. Short interest in both companies is low as always, but has increased marginally to stand at 0.48% and 0.45% of total shares outstanding on loan for Google and Microsoft respectively.
Finally, Nielsen Holdings is another media company which floated recently with a market capitalization of USD 8 billion. The market research company, which specializes in gathering and measuring consumer behaviour, sees 1% of the total shares outstanding available to be borrowed and 0.7% of this currently in lending programs.
There seems to be demand to borrow both Nielsen Holdings and Demand Media, despite the hype surrounding the floatation’s. It will be worth following short interest in both stocks over the coming months.
