The company logo and ticker for GoDaddy Inc. are displayed on a screen on the floor of the New York Stock Exchange (NYSE) in New York, United States, March 4, 2019. REUTERS/Brendan McDermid/File Photo Acquire License Rights
Sept 12 (Reuters) – Activist investor Starboard Value said on Tuesday that GoDaddy Inc (GDDY.N) is “severely” undervalued and that the web services company should consider a possible sale if it cannot improve its financial performance.
GoDaddy, a major player in the web domain registration market, is struggling with a decline in sales in the wake of the pandemic as persistent inflation and rising interest rates hit technology spending.
Starboard, which bought into GoDaddy in 2021 and is the third-largest shareholder with a 7.8% stake, said the company is expected to miss nearly all of its targets for the next two years at its 2022 investor day, including targets for revenue and adjusted core earnings growth.
The investment firm urged GoDaddy to “take an objective approach to assessing its prospects for significant revenue growth,” while also suggesting it improve margins by cutting costs.
The company’s shares rose 2.3% to $75.30, outperforming broader weakness in the U.S. market.
Starboard also highlighted the company’s technology and development costs, which have outpaced revenue growth over the past five years and totaled nearly $800 million last year.
“Since late 2021, GoDaddy’s management team and several directors have had regular and constructive discussions with Starboard Value LP. We value their perspective and look forward to continuing the dialogue,” the company said in a statement.
Starboard also announced that the company has rejected its requests for a board seat over the past 18 months.
“We continue to believe strongly in the value creation opportunity at GoDaddy and urge the company to seriously evaluate these proposals and other opportunities,” Starboard said in a letter to the company’s board.
Reporting by Aditya Soni and Zaheer Kachwala; Editing by Shounak Dasgupta and Devika Syamnath
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