Cash Machine Trading Cheap – GoDaddy Stock Set to Run?
We think GoDaddy (GDDY) stock is worth a look: It is growing, producing cash, and available at a significant valuation discount. Companies like this can use cash to fuel additional revenue growth, or simply pay their shareholders through dividends or buybacks. Either move makes them attractive to the market.
What Is Happening With GDDY
GDDY stock is available at a significant discount to its 3-month, 1-year, and 2-year highs. This can be attributed to 2026 revenue guidance missing expectations and slower bookings growth in late 2025. Market concerns about AI competition and promotional pricing further impacted investor sentiment.
The stock may not reflect it yet, but here is what’s going well for the company: Applications & Commerce revenue shows double-digit growth and 10% average revenue per user increases. Expanding AI products like GoDaddy Airo and strong free cash flow ($1.6B in 2025, $1.8B projected 2026) underpin robust cash generation; debt-to-equity, though high, is well-covered by operations.
GDDY Has Strong Fundamentals
- Cash Yield: GoDaddy offers an impressive cash flow yield of 13.8%.
- Growing: Revenue growth of 8.3% over the last twelve months means that the cash pile is going to grow.
- Valuation Discount: GDDY stock is currently trading at 33% below its 3-month high, 56% below its 1-year high, and 60% below its 2-year high.
Below is a quick comparison of GDDY fundamentals with S&P medians.
| GDDY | S&P Median | |
|---|---|---|
| Sector | Information Technology | – |
| Industry | Internet Services & Infrastructure | – |
| Free Cash Flow Yield | 13.8% | 4.4% |
| Revenue Growth LTM | 8.3% | 6.6% |
| Operating Margin LTM | 23.0% | 18.7% |
| PS Ratio | 2.3 | 3.1 |
| PE Ratio | 13.1 | 23.4 |
| Discount vs 3-Month High | -33.3% | -14.0% |
| Discount vs 1-Year High | -55.9% | -17.2% |
| Discount vs 2-Year High | -60.4% | -19.1% |
*LTM: Last Twelve Months
But What About The Risk Involved?
While GDDY stock may be a compelling investment opportunity, it’s always helpful to be aware of a stock’s history of drawdown. GoDaddy fell about 29% during the 2018 correction, nearly 47% in the Covid selloff, and close to 30% in the inflation shock. Even with solid business fundamentals, the stock hasn’t been immune when the market turns sour. It shows that even well-regarded names can face significant dips when the broader environment gets rocky. Risk is real, no matter how strong the setup looks. But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, and outlook changes. Read GDDY Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.
If you want to see more details, read Buy or Sell GDDY Stock.
Other Stocks Like GDDY
Not ready to act on GDDY? You could consider these alternatives:
We chose these stocks using the following criteria:
- Greater than $2 Bil in market cap
- Positive revenue growth
- High free cash flow yield
- Meaningful discount to 3M, 1Y, and 2Y highs
A portfolio that was built starting 12/31/2016 with stocks that fulfill the criteria above would have performed as follows:
- Average 6-month and 12-month forward returns of 25.7% and 57.9% respectively
- Win rate (percentage of picks returning positive) of >70% for both 6-month and 12-month periods
Smart Investing Begins With Portfolios
Single stocks swing wildly but staying invested matters. A well built portfolio helps you stay invested, captures upside and softens the blows from individual stocks.
The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? HQ Portfolio has posted more than 105% in cumulative return since inception, with less risk versus the benchmark index, as evident in HQ Portfolio performance metrics.