2016-04-06

GoDaddy $GDDY Secondary Offering, Reaction, Risk Factors

UPDATE April 7, 2016: GoDaddy Inc. Announces Pricing of Follow-on Offering by Stockholders--the underwritten public offering of 16,500,000 shares of its Class A common stock offered by certain of its existing stockholders--"at a price to the public of $30.25 per share" (read more at link above).

GoDaddy NYSE:GDDY Stock Chart
GoDaddy NYSE:GDDY Stock Chart (source: google.com)

GoDaddy (domain: godaddy.com | stock: NYSE:GDDY), a dominant global domain name registrar and technology company, has announced:

1. It is commencing an underwritten public offering of shares of its Class A common stock offered by certain of its existing stockholders.

2. GoDaddy will not receive any proceeds from the sale of the shares by the selling stockholders.

3. Existing selling stockholders are offering 16.5M shares of Class A common to underwriters in accordance with their option to purchase 2.475M additional shares. Existing selling stockholders include entities affiliated with KKR, Silver Lake Partners, Technology Crossover Ventures, and YAM Special Holdings (founder Bob Parsons).

4. S.E.C. filings, April 5, 2016, may be reviewed here:

5. Reaction: GoDaddy (GDDY) Stock Plunges on Stock Offering - TheStreet

6. Risk Factors (from SEC filing): RISK FACTORS: "You should consider the specific risks described in our most recent Annual Report on Form 10-K filed with the SEC, the risk factors described under the caption “Risk Factors” in any applicable prospectus supplement and any risk factors set forth in our other filings with the SEC, pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, before making an investment decision. See “Where You Can Find More Information; Incorporation of Certain Documents by Reference.” Each of the risks described in these documents could materially and adversely affect our business, financial condition, results of operations and prospects, and could result in a partial or complete loss of your investment. The risks and uncertainties are not limited to those set forth in the risk factors described in these documents. Additional risks and uncertainties not presently known to us or that we currently believe to be less significant than the risk factors incorporated by reference herein may also adversely affect our business. When we or any selling stockholders offer and sell any securities pursuant to a prospectus supplement, we may include additional risk factors relevant to such securities in the applicable prospectus supplement. In addition, past financial performance may not be a reliable indicator of future performance and historical trends should not be used to anticipate results or trends in future periods." (link added)

7. Background: GoDaddy Stock: GDDY Is Growing Like a Weed, But ... | InvestorPlace  Aug 6, 2015: "... With so many competitors in the space, GoDaddy’s strong top-line growth helps to allay fears that the market could be close to hitting saturation point .... [But] there are some significant risks that come with investing in GoDaddy stock over the long-term. The company’s operating expense grew at 20% year-over-year — 350 basis points faster than top line growth ... GoDaddy’s shares are hardly cheap — GDDY trades at 370 times forward estimates for earnings, and 3 times sales — and the risk is magnified...."

8. But most of the negatives were known at the time of the IPO:

GoDaddy IPO Puts Lipstick on the Pig, Raises $460 million | DomainMondo.com April 1, 2015: "... current IPO is structured to create limited dilution for existing owners. The result will be a large payday..."

GoDaddy IPO S-1 Teardown - GoDaddy (Pending:GDDY) | Seeking Alpha, Sept 5, 2014: "This isn't a nice clean IPO. In 2011, GoDaddy did a financing with private equity firms (KKR, Silver Lake and TCV) which drastically concentrated ownership of the company. GoDaddy is leveraged with $1.5B [billion] in debt."

9. The organizational ownership structure is complex (see graphic from SEC filing below):



Caveat Emptor!




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