Verisign‘s (NASDAQ:VRSN) primary business is .com and .net domain registrations for which it acts as the exclusive domain registrar. It competes primarily with domain name registry providers such as NeuStar, Employ Media, and Afilias to win new and maintain existing registry rights. Verisign’s stock was up slightly in the last couple of weeks as the growth in domain registrations was pretty much in line with expectations in Q3 2011. There have been a few minor developments related to Verisign’s stock, which could impact its stock price going forward.
In Q3 2011, there were around 5 million new domain registrations globally, taking the total number of Internet domains to 220 million. The number of .com and .net domains increased to 112 million, accounting for slightly more than 50% of total internet domains. This growth in domain registrations has been in line with our forecasts.
Verisign has also been trying to increase domain registrations by launching new services like DomainCountdown, which provides detailed information about expiring domain names, but we don’t expect any significant increase in domain registrations.
Verisign could also generate additional revenue by offering domain registry services for custom top-level domains for brands like .google or .apple, which have been approved by ICANN. Around 1500 brands have applied for custom TLDs already, and they will be granted in January 2012.
We currently have a $37 price estimate for Verisign, which stands nearly 2% above its market price. Its domain registration business accounts for nearly 90% of its stock price.