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Happy to see that Demand Media is up around 10% since I called it undervalued less than a month ago. The stock has now closed the 10% overreaction to the negative EPS surprise announcement and now remains undervalued only due to lower long-term expected EPS growth, which can change swiftly. Investors who were invested only due to the overreaction to the news should close the long positions.
"What the markets anticipate by the 19% drop of the price is a permanent impact on earnings in the five upcoming years, and not by 5% as the company reported, but by 10%. This is definitely an overreaction and a very pessimistic assumption"
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