The GoDaddy Inc. (NYSE: GDDY) IPO has been one of the most talked about IPOs of 2015.
The GoDaddy (NYSE: GDDY) share price opened at $20 on its April 1 debut. GDDY stock soared 30.8% that day to settle at $26.15.
Since then, it's made some drastic moves. Here's how GoDaddy stock has performed since hitting the market, and where it's headed in 2015...
How Has the GoDaddy (NYSE: GDDY) Share Price Performed Since the IPO?
Since the IPO, the GoDaddy (NYSE: GDDY) share price has been volatile.
After closing above $26 on its first day, GDDY stock quickly tumbled. It fell 1.3% over the next two trading sessions and dropped 4% over the following week.
But GDDY shares have been surging recently. After hitting a low of $24.41 on May 6, the stock has gained 9.7% since. It currently trades near $27.
Interest in GDDY stock stems mostly from brand awareness. You see, GoDaddy is the world's largest web hosting company. It manages nearly a fifth of the world's Internet domains, with close to 60 million domains under its management.
GoDaddy spent $11.6 million on advertising in the first quarter of 2013 alone. Its TV spots during the Super Bowl and other events are considered controversial by some. They usually feature scantily clad models.
The company hit a milestone after market close yesterday (Tuesday) when it released its first earnings report as a public company. GoDaddy posted a loss of $43.4 million, or $0.34 per share, for the first quarter. That's 18.2% less than the loss of $51.3 million from Q1 2014. Revenue rose 17.5% from $320.2 million to $376.3 million over the same time period.
"Our investments in products, technology platform, and customer care are making a real difference for our customers around the world, and our first quarter results demonstrate the benefits of focusing on their needs," said CEO Blake Irving.
The GoDaddy (NYSE: GDDY) share price saw a knee-jerk drop. It dipped more than 2% in post-market trading following earnings.
GDDY is now trading at $27 a share. Here's how we recommend playing the stock...
Is GoDaddy (NYSE: GDDY) Stock a Buy?
Even with the recent surge, there are two reasons to avoid GDDY stock: lack of profitability and increasing competition.
As mentioned earlier, the company lost $43.4 million from January to March. It lost a total of $143.3 million in 2014. For 2013 and 2012, the company reported losses of $199.9 million and $279.3 million.
Yes, GoDaddy is reducing losses over time. But the company has been around for 18 years and still isn't profitable.
In fact, it hasn't made a profit in six years. It has $1.4 billion in debt from its leveraged buyout by KKR & Co. (NYSE: KKR) and several other private-equity firms in 2011.
Some analysts believe its lack of profitability has set it up to fail.
"Why would anybody invest in a company that is losing hundreds of millions of dollars per year?" said Jason Rotman, president of Lido Isle Advisors, on CNBC's "Stock Brawl." "GoDaddy, in my opinion, has zero moat of safety around their business model."
And GoDaddy's competition will make profitability harder to attain in the future.
The company already competes with private firms like Endurance and Network Solutions. But GoDaddy has a much bigger fear moving forward...
Shortly after GoDaddy filed its IPO, Google Inc. (Nasdaq: GOOG, GOOGL) announced it would enter the web domain business. "Google Domains" is currently in the Beta stage and will offer the same services, including domain hosting and registration.
GoDaddy even referenced the stiff competition in its IPO filing.
"Some of our current and potential competitors have greater resources, more brand recognition and consumer awareness, more diversified product offerings, greater international scope and larger customer bases than we do," the filing stated.
Never miss a stock update - follow us on Twitter at @AlexMcGuire92 and @moneymorning. Like us on Facebook: Money Morning
There's a Way to Profit from the Biggest IPOs of 2015... Unless you have millions of dollars to invest, you'll often be left out of the big IPO money. But Money Morning experts have found a way for investors to play the IPO market and see the types of gains normally reserved for the "Insiders Club"...
Related Articles: