What's Up With Demand Media?

After Tuesday’s market close, Demand Media (DMD) came up with its earnings and both the top and bottom lines came in ahead of expectations, very slightly. I did not get a chance to verify the market reaction at the opening and since I do not use intra-day stops, it did not matter much anyway. However, when I did look, Demand Media was doing incredibly well, rising nearly 20% on the day and leaving my trade at -30% or so.

Here is the two-day chart for DMD:

[Click all to enlarge]

However, those who had taken Demand Media to these incredibly highs seem to have ran away at 10AM EST or so, leaving the stock to tank. Look at this year-to-date chart:

Impressive post-IPO performance, eh? That is what happens when a company relies on an unproven business model, has a shaky accounting history and depends heavily on a company,