GoDaddy Inc., the provider of domain names and web hosting, has set the price for its initial public offering at $17 to $19 per share. The upper limit of the valuation is $2.87 billion for the 22 million class A shares being offered. GoDaddy looks to raise as much as $418 million from the IPO. Known as a hub for small businesses to open their websites, GoDaddy plans to go on the New York Stock Exchange with the symbol “GDDY.”
This is not the first attempt by GoDaddy to go public. The company first tried in 2006 but ultimately withdrew its proposal. This time, GoDaddy’s IPO comes more than three years after it was taken over by KKR & Co. L.P. and Silver Lake Management.
KKR's class A share stake will fall to 23.9% from 27.9% after the company goes public. However, the private equity firm would continue to hold 20.9% of GoDaddy's class B shares.
Decrease in number of companies going for IPOs this year
Only two technology giants have gone public this year. One of them is Box Inc. (BOX, Financial) which provides online cloud storage. Stock of Box Inc. has dropped around 27% since its launch through the initial public offering. On the contrary, analysts have better hopes for GoDaddy since the IPO has elicited better demand in the market. This year has seen a plunge in number of companies going public.
The IPO market has slowed down compared to last year as public offerings raised about $93 billion in 2014, the highest since 2000. 71% of companies that had an IPO last year were unprofitable. The market was hungry for rookie companies last year and about a quarter of these companies were technology companies. The trend has changed this year. While the stock of Box Inc. popped and quickly fizzled, all eyes are now on GoDaddy’s IPO.
GoDaddy’s story
GoDaddy started business in 1997, and has come a long way making more than 59 million domain names under its management by the end of 2014, which has turned it into the world’s largest domain name registrar.
GoDaddy handles about one-fifth of the domain names on the web. Headquartered in Scottsdale, Arizona, GoDaddy employs more than 4,000 people and serves more than 12 million people. The company is known for its provocative Super Bowl advertisements and NASCAR sponsorship.
Founder and ex-Marine Bob Parsons will hold 40% of class B shares and about 24% of class A shares after the company goes public. Parsons stepped down as executive chairman of the company in June last year. Blake Irving is company’s new CEO who was known for his work as Yahoo!’s (YHOO, Financial) chief product officer from 2011 to 2012.
Yet the company’s financial condition is not so promising. The company made a loss of $143 million last year, though this was less than the $200 million it lost in 2013 and $279 million in 2012. But GoDaddy hasn’t turned into profit since 2009. The Super Bowl advertisements and celebrity spokespeople have both harmed and helped the image of the company. The infamy it achieved could be useful when the IPO is offered. The lead underwriters of the IPO are Morgan Stanley, JPMorgan and Citigroup.
Last word
The company has debt worth $1.4 billion and surely the IPO is a golden opportunity to raise equity capital for GoDaddy. But the investors need to be cautious while investing in GoDaddy as it holds a lot of debt in its financial books. But, as the company has a huge customer base that it has created in the past 18 years, things might change for the better for GoDaddy after it gets listed on the NYSE. Let’s stay tuned to check out the performance of GoDaddy after its public listing.
