No April Fools’ Joke: GoDaddy Stock Is Revving Its Engines

GoDaddy-stockDon’t let the silly name fool you. GoDaddy Inc. (NYSE: GDDY), the Internet domain name and Web publishing services business that enjoyed a successful initial public offering on April Fools’ Day, follows a long line of Internet businesses – think Yahoo (NASDAQ: YHOO), Google (NASDAQ: GOOGL) and Facebook (NASDAQ: FB) – with practically nonsensical names but rock solid business models.
And like many of its predecessors that rose to astronomical values while skeptics stood on the sidelines, GoDaddy runs a large and growing business that stands to benefit greatly from the way we’re all using the Internet to live and work.
The Scottsdale, Ariz.-based company is probably best known for its domain name business, but this is not simply a service that helps you reserve a website address and forget about it. GoDaddy provides a wide range of Web publishing services aimed at very small businesses and entrepreneurs who want to establish a Web presence on the cheap. GoDaddy can help you set up a blog and design your own logo. Last year, it added a service to help small businesses create online retail stores.
And it’s already established that there is strong demand for the services it’s selling. GoDaddy has more than 13 million customers and generated revenue last year of $1.4 billion.
With a successful IPO that saw GoDaddy stock open at $26.15 – well above the $17-$19 range set in March – GoDaddy is now worth almost $4 billion. But there’s potential for much more growth.
Here’s why. First, the Internet is increasingly essential to do business. That’s a no-brainer, of course, but the way we use the Internet to do business has changed exponentially over the years and continues to evolve.
While the ease of establishing a Web presence was once prohibitively costly or complex for mom-and-pop type operations, technology has changed all that. GoDaddy has been one of the businesses at the forefront of this shift, wrapping up all the essential services you need to get started in an affordable turnkey package.
The second reason this business has such strong potential is that we’re an increasingly entrepreneurial world. As it becomes easier to hang up a virtual shingle, more of us are doing so. For some it’s a hobby, for some it’s an alternative to working for The Man, and for many of us, it’s a little of both. We’ve become a society where we curate our own Facebook pages and hone our personal brands. Many of us job hop, and even if we work nine-to-five jobs we’re likely expressing ourselves online.
It wasn’t that long ago that the merits of the Facebook business model were being debated. GoDaddy has already demonstrated a strong demand for its services, and it’s not hard to imagine a not-too-distant future where more people are signing up.
It’s important to note that GoDaddy will continue to face stiff competition. To date, the company’s real strength has been in packaging and marketing the services it provides. But in the same way that GoDaddy has tapped into the falling cost of Web technologies, rivals will be able to compete on price. Google didn’t succeed because it was the only search engine, but because it was a shrewd innovator in a crowded field.
GoDaddy will face that same challenge in the coming months and years. But it’s off to a very promising start.

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