Is The Market Pricing Go Daddy Fairly?

March 15th, 2018 by Trefis Team
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Go Daddy’s (NASDAQ:GDDY) stock price increased by around 43% and revenue grew 21% in 2017, which is a testament to its strong position in the highly regulated .com and .net domain industry. In 2016, Go Daddy acquired HEG, which is a market leading domain registrar in Europe. As more and more companies rely on digitally growing their business, Go Daddy’s strong position in the domain registration market will help it grow in the near term. Additionally, the company’s focus on small and medium businesses, providing them with in-house and third-party products to maintain an online presence and conduct business smoothly, bodes well for the company’s growth outlook.

We have created an interactive dashboard analysis to estimate Go Daddy’s valuation based on its expected revenues for FY 2018. You can make changes to these variables to arrive at your own price estimate for the stock.

 

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We have arrived at a $62.24 price estimate for Go Daddy based on revenue projections of $2.6 billion for 2018, a P/S multiple of 4.1, which is slightly higher than that for 2017, but still lower than the industry average, and a share count of 173 million. The market price stood at $63.34 as of March 15, which is roughly in-line with our price estimate.

Go Daddy’s revenue comes from three sources: Domain Revenue, Hosting and Presence Revenue, and Business Applications Revenue.

We estimate Go Daddy’s revenue using the following steps. The average revenue per domain and number of domain registrations have been estimated. The revenue for Domain segment is arrived at by multiplying the two metrics. The Hosting and Presence, and Business Applications revenues have been estimated based on historical revenue growth. The total revenues for Go Daddy are then calculated by adding the revenues for the three divisions.

 

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