Why GoDaddy Stock Should Be on Your Radar

GoDaddy (GDDY) is a domain registrar and web hosting company that went public on April 1, 2015. The offering raised more than $400 million for the company at that time. They are the world's largest registrar with a reported 77 million domains under management.

The company, which was founded in 1997 as the internet era took off, continues to expand its offerings in a competitive market. Headquartered in Scottsdale, Arizona, the company's vision is to vision is to "radically shift the global economy toward life-fulfilling independent ventures."

The company has been growing its sales with 2017 revenue coming in at $2.23 billion, a year-over-year increase of 20.8%. GoDaddy brought in profits of $138.9 million, finishing in the black after a loss in 2016.

The company doesn’t pay a dividend and is not likely to pay a dividend anytime soon. However, GoDaddy has been growing its customer base, as well as the average revenue it generates from each user of its services, which went up from $114 in 2014 to $139 in 2017.

The company said its GoCentral website builder is seeing continued strong adoption, increasing conversion from free to paid, and generating positive customer feedback with rising net promoter scores.

Touting itself as a provider of internet-related services to small businesses, GoDaddy helps these enterprises identify and register a domain name. Considering that the operators of these businesses are not necessarily tech-savvy, GoDaddy also helps build their websites and manage their online presence so that they show up on search engine results and are active on social media and other marketing sites such as Yelp. In addition, the company provides add-on services such as email tied to the customer’s domain, online marketing, invoicing and bookkeeping. 

While there is market opportunity, there is also heightened competition from others aiming for a piece of GoDaddy’s market. Even names such as Alphabet (GOOGL) and Amazon (AMZN) see potential in web hosting and domain registry-related services. GoDaddy’s market is also a rapidly changing one as the pace of innovation is fast, and the company needs to stay on top of such change to be successful. The company also has to remain alert to potential search engine and social media changes that could impact its customers. And while the company has been historically geared towards providing computer-based services, it needs to ensure that its services are also accessible on mobile devices.

Another risk comes from potential security breaches. The company’s customers have been subjected to denial of service attacks from hackers and GoDaddy has to guard against such events that could impact its customers’ operations. As the company continues to grow its international customer base, it needs to be aware of the differences in culture and cyber laws. 

GoDaddy has expanded its reach and attracted investor attention with its IPO. It operates in a dynamic market and if the company is successful in meeting its targets and achieving its plans, GoDaddy's stock could offer a great payback. However, this is by no means a given and GoDaddy has to navigate a variety of risks, including competing against large, established companies.