GDDY GoDaddy
Cash-gushing domain toll booth priced like it's in decline; modest growth plus durable margins argue undervaluation.
The story
GoDaddy is the dominant small-business domain registrar and web-presence platform, with ~20M+ customers and a sticky, recurring domain/hosting base that it is upselling into commerce, payments and AI-assisted website tools (Airo). It is a mature, cash-generative franchise: growth is mid-to-high single digits, and margins have expanded sharply through cost discipline and mix shift toward higher-margin Applications & Commerce. Takeover chatter (Gen Digital) highlights strategic value but the core is a slow-growing, high-return toll on small-business online presence.
Y1 growth of 7.5% matches recent 7-8% prints with Airo/commerce upsell and pricing, fading toward 3% as domains mature. Margin held near the current ~26% rather than extrapolated further, since recent expansion was largely cost cuts and marketing restraint that will not recur indefinitely. Low capex and negative working capital (deferred revenue) justify sales-to-capital above the reported 1.28; beta sits slightly below the tech anchor given recurring revenue, with modest failure risk despite $2.7B net debt.
Value drivers
| Revenue growth (Y1) | 7.5% |
| Terminal growth | 3.0% |
| Forecast horizon | 8y |
| Target operating margin | 26.0% |
| Years to target margin | 4 |
| Sales-to-capital | 1.60 |
| Beta | 1.05 |
| Failure probability | 2.0% |
| Cost of capital (WACC) | 9.0% |
| Terminal WACC | 8.9% |
Valuation bridge
| PV of explicit FCFF | 6.88B |
| PV of terminal value | 12.04B |
| Equity value | 15.90B |
| ÷ shares → per share | $125.51 |
News
bullish +0.60 · 8 articles
- 3 Low-Volatility Stocks That Concern Us
- Gen Digital CEO addresses GoDaddy acquisition rumors
- GoDaddy Stock: Is GDDY Underperforming the Technology Sector?
- GoDaddy Jumps on Takeover Report While the Would-Be Buyer’s Stock Sinks
- Wix (WIX) Stock Trades Down, Here Is Why
- Is GoDaddy (GDDY) A Takeover Target After An Early Acquisition Offer?
- Gen Digital (GEN) Wants to Buy GoDaddy. So Why Did Its Own Stock Crash 12%?
- US Equity Markets End Higher Amid Falling Oil Prices Following Iran's Proposal to Reopen Strait of Hormuz
Projected free cash flow to the firm
| Yr | Revenue | Growth | Margin | NOPAT | Reinvest | FCFF | PV |
|---|---|---|---|---|---|---|---|
| 1 | 5.49B | 7.5% | 25.8% | 1.21B | 239.25M | 973.08M | 892.49M |
| 2 | 5.86B | 6.9% | 25.8% | 1.30B | 235.15M | 1.06B | 895.39M |
| 3 | 6.23B | 6.2% | 25.9% | 1.38B | 227.72M | 1.16B | 892.62M |
| 4 | 6.57B | 5.6% | 26.0% | 1.47B | 216.85M | 1.25B | 884.21M |
| 5 | 6.90B | 4.9% | 26.0% | 1.54B | 202.52M | 1.34B | 867.19M |
| 6 | 7.19B | 4.3% | 26.0% | 1.60B | 184.78M | 1.42B | 845.18M |
| 7 | 7.46B | 3.6% | 26.0% | 1.66B | 163.80M | 1.50B | 818.56M |
| 8 | 7.68B | 3.0% | 26.0% | 1.71B | 139.80M | 1.57B | 787.76M |
Key risks
- AI website builders and agentic tools (Wix, Squarespace, Shopify, LLM-native builders) commoditize web presence and erode the upsell thesis
- Domain market saturation and price-sensitive SMB churn in a downturn
- Leverage plus aggressive buybacks reduce flexibility if growth stalls
Catalysts
- Takeover bid (Gen Digital or private equity) crystallizing strategic value
- Airo AI monetization lifting ARPU and Applications & Commerce growth into double digits