Categorized | IPO

GoDaddy Files $100 Million IPO

GoDaddy has officially filed its plans for a 100 million dollar IPO, or Initial Public offering of its stock. The company is looking to raise money in order to pay off some of its debts and restructure the company. The news comes almost ten years after the last time that GoDaddy had begun looking at filing an IPO of its stock. Now the question that remains is understanding why GoDaddy is looking to follow this path.

What is GoDaddy?godaddy

The chances that you have seen a sexually charged commercial with eye appealing women doing something taboo to gain your attention than making a quick cut to the actual advertising of GoDaddy’s website is rather high. The company is known more for its racy commercials than for the website domain registration services that it offers to customers. The company allows persons to and small businesses to set up internet domain names. It offers these people and businesses access to website designing, security and hosting. As of December 31, 2013 GoDaddy had 57 million domain names registered under their management. However, Godaddy has been around for some time and continues to show sign of continual growth which have been marred by its overall lack of a sustainable profit. The company was founded in 1997 and has grown exponentially but continues to lose money from the day to day.

The Issue with GoDaddy

The issue with GoDaddy is not a lack of continual growth, but rather its lack of gaining a profit. The company released a statement confirming that it had reached over 1.4 million bookings in 2013. The company has been expanding at about 13 percent per year and reaching close to 12 million customers in 2013 alone. That being said, GoDaddy has reported a profit since 2009 as its finances continue to dwindle. In 2012 the company lost 279 million dollars and it lost another 200 million dollars last year. This year is hasn’t shown much if any better prospects in comparison to the last two years with a first quarter loss of 51 million dollars alone! So the question that is being perpetuated is why would someone invest in a company that shows promise but not profit. GoDaddy is looking to raise the capital via this initial public offering in order to pay off some of its corporate debits and restructure the goals and infrastructure of the company and its direction.

In 2011, GoDaddy was plagued with financial troubles due to a bad run in their efforts to grow the business and customer base. Three separate equity firms came to GoDaddy’s rescue which are KKR& Co., Technology Crossover Ventures, and Silver Lake Partners. These three companies bought into the company with a whopping 2.25 billion dollars in order to gain a major share in GoDaddy. At the time the owner and founder of GoDaddy Bob Parsons had agreed to step down from his then current position of chief executive officer back in 2011. Upon the more recent announcement of their 100 million dollar IPO fundraiser, Bob Parsons has again announced that he is stepping down from his current position of executive chairman. Mr. Parsons has announced that while he’ll be stepping down from his current position he will still be staying on the board that continues to run the company. Parsons still owns 28 percent of the company directly, KKR and Silver Lake both each own 28 percent, and Technology Crossover owns the smallest of all the divided up ownership at 12 percent. The other side of wanting to raise 100 million dollars in capital is due to the fact that the three companies that bought into GoDaddy are able to charge annual fees. GoDaddy wants to allocate 25 million dollars towards paying off the three equity companies in order to void the continual ability to charge GoDaddy these fees.

GoDaddy Slightly On The Risegodaddy 1

While the negative aspects of the company are currently seemingly overwhelming and mounting, the company has also proven that there is gradual and steady growth occurring within the company. The customer base has been growing each year by roughly 13 percent. The total number of registered websites has also grown with each new year. The company has established the customer base and is showing the potential in selling hundreds of newer top level domain names pending the approval By the Internet Corporation for Assigned Names and Numbers.

When the IPO goes through and the sale of GoDaddy shares go into effect the amount of shares being sold and the cost at which is being charged will have a lot to do with the future of the company. It will be most interesting to see how potential investors view GoDaddy and its ability to grow in the current market and global economy while being able to turn a profit as opposed to previous years in failed attained profit.



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