On the heels of the upcoming Go Daddy IPO, Pando Daily listed 10 red flags for those thinking about investing. Some in my opinion are valid and some are not. Asking the question in red flag #3 “And besides, how much longer are small businesses going to need Web sites in an era when most are engaging with customers on Facebook, Twitter or other mobile apps?” Small businesses need to control their content on their own site, anyone advising them to use a walled garden with holes in privacy and data retention is foolish. The other point I would add is what about when today’s hot site is the next GeoCities or Friendster ?
Here is a look at the first three from the article:
Even if GoDaddy isn’t expected to be the hottest tech IPO this year, it’s still notable because of the high number of red flags that surround its offering – from annual losses to a dying market to a corporate structure that favors old investors over the new. Here are ten red flags we spotted.
Competition with Google.
Google used to offer GoDaddy’s domain-registration service as an option for its Google Apps customers. Last year, Google started handling registrations itself, including the newer dot-word domains, depriving GoDaddy of an important source of businesses not just for new domains but for web hosting as well. Having Google go from partner to competitor is rarely a positive development.
Investors don’t exactly love this space.
GoDaddy tried and failed to go public in 2006. Other companies in the sector have gone public over the years, and few are faring well. Web.com is down 49 percent over the past year. Wix.com is down 29 percent. One exception seems to be Endurance International, up 32 percent in the past year, although the company has posted net losses for years.
A dying market with low margins.
On the plus side, GoDaddy’s revenue has been growing around 23 percent a year. But it’s toiling in the kind of high-volume, low-margin business you see when a service becomes a commodity. And besides, how much longer are small businesses going to need Web sites in an era when most are engaging with customers on Facebook, Twitter or other mobile apps?
Read the other 7 on Pando.com
I don’t agree with #3 at all but I do agree-this IPO will flop. I’ll be looking to short any and all bounces.
Not to mention we just found out from our GoDaddy account representative that they will NOT be honoring the ICM Registry’s Domain Matching Program retail prices for the new gTLDs.
ICM Registry issued a press release in March that stated existing domain holders would only be charged $12.99 for the exact match domains. However, we received information today that GoDaddy will be charging more than the amount stated in the ICM Registry press release.
No word on how much more. But GoDaddy is clearly taking advantage of their “captive” customer base and milking them for more than the retail price. GoDaddy knows it will cost existing owners a minimum of $63 to transfer each .xxx domain out. So they are counting on their customers paying the premium, rather than spending funds to transfer to a more reasonable vendor.
Hello MHB,
We can see whoever buys this deal will be holding a big bag of …….. ?
Parsons got out for a reason ?
Gratefully, Jeff Schneider (Contact Group) (Metal Tiger)
Hello MHB,
Pay particular attention to the timing of this according to the big picture. You know we know almost everybody savvy to DNS knows the gTLD Tulip effect. Our advice back away from this deal.
JAS 3/30/15
Gratefully, Jeff Schneider (Contact Group) (Metal Tiger)
More logical is ICANN IPO
Can a Facebook page replace a website?
Absolutely not. Not every uses nor cares for face book. I know plenty of people who do not have an account and who never will. You are losing those customers if you “replace” your website. Not a smart thing to do at all. Facebook is NOT about business no matter what they try to tell you.
One of the biggest problems facing Godaddy is that they’ve artificially pumped up their customer-base by offering very low priced coupons. So while everyone is buying their 99 cent domains, they’re not renewing them at Godaddy. The churn is going to be very high when these customers transfer out. Their refusal to offer customers renewal coupons like they did in the past is a slap int the face. I’ve moved 100’s of domains away already.
I would not invest in GoDaddy. They need to stay private. This IPO could spell their death.
Go Daddy will be below $10 on the next market dip. As mentioned we’ll be shorting any bounces as soon as we can.
Oh, not to mention that GoDaddy does not have an email customer service system anymore. Sorry but that is backwards. I dont want to hear anything about it saving money because way too many large customers left GoDaddy after that decision and they need to get on the ball and get with the times – emailing customer service is a standard out there.
Whats clear, now, is that E V E R Y T H I N G becomes public whereas prior to this IPO they could hide behind the shroud of a private company. Not any more… Uh oh……….. lets see how long it lasts.