News Column

GoDaddy IPO could scoop up $750 million

June 9, 2014

By Matt Krantz, @mattkrantz, USA TODAY



Internet domain registration company GoDaddy on Mondayfiled its plans with the Securities and Exchange Commission to sell $100 million worth of shares to the public. But the deal is expected to be much bigger when completed.

The $100 million figure is just a placeholder typically included in early versions of a prospectus, only to be updated later. The initial public offering is likely to fetch at least $750 million, estimates IPO tracking company Renaissance Capital.

Analysts, though, now have a closer look at the financials and point out that while the company is boosting revenue, it's still losing money. GoDaddy posted revenue of $320.2 million during the first quarter, up 22% from the same period last year. But GoDaddy also lost $51.3 million, roughly the same loss from the year ago.

"It's a well-known company. It's branded. But at this stage, they should be making money," says Francis Gaskins, director of research at Equities.com. "If they can't make money now, when will they be making money, and what will be different?"

GoDaddy's IPO, widely anticipated since last year, makes the company the latest Internet darling to take advantage of the open window for new stock offerings. In the past year, there have been 117 initial public offerings, Renaissance says. That's up 52% from the same period last year. Technology stocks have been a big driver of the activity. There have been 32 technology IPOs this year, making the industry second only to health care in terms of the number of deals.

GoDaddy is hoping to jump aboard what's been strong interest in Internet deals so it can raise money to pay down debt, Gaskins says. It has more than $1 billion in long-term debt as of the end of the first quarter.

But investors are also increasingly skeptical of shares from newly public companies, especially when the companies are losing money. The Renaissance IPO ETF, which tracks shares of recent IPOs, is up just 0.4% this year, trailing the 6.5% gain by the Standard & Poor's 500.

GoDaddy hopes name recognition and revenue growth will let it glide past increasingly skeptical IPO investors, Gaskins says.


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Source: USA Today


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