Seeking Alpha had an article published by a member (Sneha Shah) who felt Go Daddy was too expensive to buy right now, he pointed out valuation compared to peers, the business being a low margin business and competition from the likes of Google.
From the article:
GoDaddy negatives
1) Valuation and Debt – I think that GoDaddy can be an attractive investment but at a much lower price. The company’s stock price has jumped by more than 30%, since it did its IPO at $20. The company is not making a profit, though it is generating a free cash flow of more than $100 million. The valuation at more than $4 billion is a bit too high for a company that’s operating at moderate margins and does not have a great growth profile either. The company’s underwriters are coming out with favorable sell side reports, despite no favorable catalysts. GoDaddy has a net debt of around ~$850 million which is a bit high considering the technology sector. Though it does not face any liquidity risk, this means that the company’s enterprise value is more near $5 billion. Its EV/EBITDA ratio is quite high at more than 10x. The company’s P/B ratio at 10.6x is at a ~50% premium to its listed competitor web.com (NASDAQ:WWWW).
Read the full article here
I don’t know that I would put Google as a real worry for Go Daddy, they are involved in a million things and will never focus on domain names imo. Plus Google does not have an auction platform, Go Daddy Auctions is a cash cow, Go Daddy does nothing and a name like uJet.com expires and they sell it for $9,200. Google does not and will not have that revenue stream.
Go Daddy needs to make sure they continue to work on security and make sure customers can feel safe about their domain names not getting stolen, and if they do they can get them back. Blake Irving has focused on Go Daddy being a one stop shop for small business, a lot of other products have higher margins than domain names, if they execute their game plan in the small business offerings then they should be able to be profitable.
Disclosure: I have no postition in Go Daddy long or short.
Is there a saying that goes…
Is Go Daddy Too Expensive to buy ?
then you will never afford NOT to buy!!
so you think the housing values or stock values will dropped to the 2007 value?
dream on!!
The problem with godaddy as I see it is the desire to charge for every little thing.
I have my web site with another ( well known) hosting company and they will let you experiment building a web sait or online store for free.
Unlike Godaddy who lure you to try there free website design only to find out a page into it that they want your credit card.
Free at Godaddy is not free.
Would be nice to build a web store or site and then say -ok i like it, ill now pay.
But free .com domain name registration with Godaddy is actually free, even though you will have to buy a hosting plan to benefit.
Never say never IMO in response to “Google does not and will not have that revenue stream.”
GDDY -the MACD and COPPOCK are both topping out- this stock is in trouble. That said-Here’s why you can’t short this stock-you could wake up any Monday morning to find out GOOGLE or another large company bought them-but for now this name is topping-right here.
I like godadfy’s services. However when it comes to evaluating the industry’s growth rate going forward one has to ask how sustainable is a business model which relies on speculators who hold perhaps90% of registrations most of which don’t earn enough parking revenue to pay renewal fees. I certainly have not seen my average sales price increase in the last year as most sales are now low$xxx
I would also factor in the near universal loathing the company has in the Tech sector for its support of SOPA & PIPA. It’s a big enough brand for it to alienate a good percentage of the industry and carry on but that type of enormous PR catastrophe can cause massive ongoing harm to a brand. As someone who manages 100’s of domains I would never go back and always advise clients against.
I am not an investor in Go Daddy but a client. I just purchased 3 web domain from them. They are very expensive and we have to pay for every little thing possible . Why not offer package deal to their client.??? One thing for sure is that when you are not an American it is a nightmare to pay with a credit card. My conclusion after this purchase??? I will not go back there and will try to find a new domain supplier. I forgot to mention that I had been a client of Go Daddy 3 times previously but now it is over.
all the best