According to a regulatory filing with the US Securities and Exchange Commission, activist investor Starboard Value LP has purchased a 6.5% interest in web services provider GoDaddy valued at around $800 million and accounting for around 10,000 shares. This became Starboard's largest holding.
- GoDaddy's stock, which has lost 8% so far this year, climbed by more than 8% following the news
- Starboard argued that GoDaddy's shares were undervalued and provided an appealing investment opportunity
The position was first reported by the Wall Street Journal. According to the Journal, Starboard intends to push the corporation to improve its performance. Due to the COVID-19 epidemic, some firms have progressively switched to digital operations, according to Arizona-based GoDaddy.
- Many businesses were praised as "pandemic winners" and traded at elevated multiples throughout 2020 and 2021
- Yet, many of these stocks came down in recent months as they failed to sustain their sales growth and the threat of increasing rates loomed
- The digital-switch pushed forward by the pandemic helped many technology businesses gain a large number of customers in a short time span
- However, many of these businesses failed to retain these new customers or even turn a profit
- Yet, customers gains and improved business momentum might prove to be more sticky at internet-infrastructure provider such as GoDaddy
- GoDaddy's shares still appear relatively conservatively priced if it manages to sustain a 7% year-on-year sales growth (CAGR) over the next 8 years
Please note that this article does not constitute investment advice in any form. This article is not a research report and is not intended to serve as the basis for any investment decision. All investments involve risk and the past performance of a security or financial product does not guarantee future returns. Investors have to conduct their own research before conducting any transaction. There is always the risk of losing parts or all of your money when you invest in securities or other financial products.
Photo by GoDaddy.