GoDaddy Stock Jumps on Acquisition News
GoDaddy stock closed up just under 4% today, a nice jump considering the Dow was down over 100 points at the close of business. A publication called Bidness Etc. said GoDaddy “stock surged after the company announced acquisition of almost 70,000 domain names to its Worldwide Media, Inc. domain name portfolio.”
According to Yahoo Finance, GoDaddy’s market capitalization is $5.27 Billion. After the market closed today, GoDaddy stock was trading at $33.94 Up $1.26 on the day and up 3.86%. Considering the market cap, this jump was worth somewhere around $200 million in valuation. Whatever the company paid for Mike Berkens’ portfolio, the market seems to like the news, and I assume the company will do well with the acquisition.
To get perspective from GoDaddy, Phoenix Business Journal published an article about the acquisition and shared some insight from Paul Nicks, senior director of GoDaddy’s aftermarket division. The driver behind the acquisition was to give GoDaddy the ability to connect small businesses (the company’s target audience) with good domain names. Instead of selling a domain registration for around $10, the company can try to sell a much higher value domain name that meets or exceeds the needs of their customers.
Even without being privy to any details about the deal, I believe this was a good deal for both parties. GoDaddy and Mike Berkens are both savvy parties, and I would imagine both feel good about the deal they struck. Even Mike acknowledged that GoDaddy will make money from the portfolio when they begin to sell individual domain names.
The only issue I see is that GoDaddy is now competing even more with domain investors when it comes to the aftermarket. Including the Marchex portfolio, the company owns somewhere in the ballpark of 300,000 domain names. I presume they will continue to be opportunistic buyers if the right deal comes around. I have no idea if they are (or will) favor their own names over client listings when it comes to searches on its platform but I can see why some people might get concerned about it.
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