GoDaddy prepares for an IPO.
Financial advisory portal, Fool.com, just published their view on the much anticipated GoDaddy IPO – and it’s not a positive one.
Focusing on the biggest domain registrar’s financials, The Motley Fool writer rips GoDaddy, advising investors to “stay away from this tech IPO.”
The article mentions that the upcoming GoDaddy IPO is “not as bad as it seems, but still not great,” justifying it as follows:
“That $143 million loss GoDaddy reported in 2014 is actually not the most useful number in judging the business. GoDaddy is using what’s called an Up-C structure for its public offering, in which a new company, the one investors will own after the IPO, buys the assets of the old company above cost. This creates intangible assets on the balance sheet, and some of these can be amortized over time, creating a noncash charge against earnings.”
Another staggering criticism is targeting the domain registration business in general:
“GoDaddy’s main business, registering domains, isn’t a very good business to be in. It’s a high-volume, low-margin commodity business dictated by fees paid to both the registry operator, VeriSign for the .com extension, and to the Internet Corporation for Assigned Names and Numbers, or ICANN. For each .com domain name GoDaddy registers, it must pay $7.85 to VeriSign and $0.18 to ICANN annually, in addition to other annual fees paid to ICANN. It also doesn’t help that Google now sells domain names directly.”
Obviously, despite The Motley Fool’s experience in corporate valuation and the stock market, one should make educated decisions based on their own research. No single publication is a gospel or an outright authority, and the volatility of stocks is a challenge of its own.
For the full GoDaddy IPO article on Fool.com, click here.
