GoDaddy plunges 8% on weak Q1 guidance despite Q4 earnings beat
Analysts slash price targets as web hosting company flags softer customer acquisition
GoDaddy shares fell more than 8% in after-hours trading Tuesday after the web hosting company delivered quarterly earnings that beat expectations but provided disappointing revenue guidance for the current quarter, prompting several Wall Street firms to cut their price targets on the stock.
The Scottsdale, Arizona-based company reported non-GAAP earnings per share of $1.80 for its fiscal fourth quarter, significantly surpassing analyst estimates of roughly $1.58 to $1.61. However, investors focused instead on the company's forward-looking guidance, with management projecting first-quarter revenue of $1.26 billion—about 1.4% below the $1.28 billion consensus forecast.
The stock dropped 8.23% to $84.70 in extended trading, adding to what has been a challenging period for shares. Even after Tuesday's after-hours decline, GoDaddy's stock remains far below its 52-week high of $193.55 reached last year, reflecting broader concerns about growth at the once-highflying domain registration and web services provider.
Revenue for the fourth quarter came in at $1.27 billion, representing 6.8% year-over-year growth but falling approximately 1.8% short of the $1.30 billion analyst consensus. The earnings beat and revenue short-fall illustrate a familiar pattern for GoDaddy: cost management driving profitability while top-line growth lags investor expectations.
Analysts moved quickly to adjust their expectations following the guidance shortfall. The average 12-month price target among analysts now stands at $156.25, down 10.59% from the previous target of $174.75. Several firms made notably aggressive cuts to their outlooks.
Benchmark reduced its price target to $210 from $240 while maintaining a buy rating, while Morgan Stanley lowered its target to $145 from $159 with an equal-weight rating. Cantor Fitzgerald cut its target to $130 from $150 with a neutral rating, and Jefferies made the steepest reduction, lowering its target to $100 from $140 while maintaining a hold rating.
Despite the after-hours drop, the stock currently trades at $92.30 with a market capitalization of $12.55 billion. The company's trailing price-to-earnings ratio stands at 15.63, while the forward P/E of 19.80 suggests investors are still pricing in some growth expectations despite the guidance concerns.
Analyst sentiment toward GoDaddy remains generally positive, with 9 analysts rating the stock a buy or strong buy and 7 maintaining hold ratings, according to market data. The company has demonstrated consistent profitability, with quarterly earnings growth of 14.4% year-over-year and revenue growth of 10.3% over the same period.
The softer guidance comes at a time when technology companies are facing increased scrutiny over growth prospects and customer acquisition costs. While GoDaddy's core domain registration business generates steady cash flow, the company has been investing in new product lines and artificial intelligence tools to drive growth among small business customers.
The after-hours decline puts additional pressure on management to demonstrate that the Q1 guidance is conservative rather than indicative of a broader slowdown in the small business web services market. Investors will be watching closely for commentary on customer acquisition trends and the adoption rate of newer product offerings when management discusses the results in greater detail.
GoDaddy's next major catalyst will likely come with its first-quarter earnings report, when investors will see whether the company can deliver on—or exceed—the guidance that sparked Tuesday's selloff.