Record Customer Growth Means It’s Go Time for GoDaddy

While the U.S. economy reeled from the onset of the novel coronavirus, not every business has posted net losses in 2020. GoDaddy (NYSE:GDDY) is a prime example of a company that’s weathering the storm. Thus, the GoDaddy stock price reflects the company’s resilience throughout these challenging times.

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It’s been well-documented that e-commerce companies have thrived amid the backdrop of the current global pandemic. Opportunistic investors might choose to capitalize on this trend by taking a position in Amazon (NASDAQ:AMZN) or Shopify (NYSE:SHOP).

Yet, those are the most obvious examples, and they may represent crowded trades. A lesser-known beneficiary of the e-commerce explosion is GoDaddy, which assists businesses and individuals through a suite of website-hosting services.

Marketing is essential, and having a website is a must at a time when so many people are browsing and shopping online. Skeptics might claim that GoDaddy just happened to be in the right place at the right time. But there’s an argument to be made that GoDaddy stock’s momentum is really just getting under way.

A Closer Look at GoDaddy Stock

For anyone who doubts the power of resistance levels, they should take a close look at this stock. There’s something about the $80-$81 price level that the GoDaddy bulls just can’t seem to surmount.

In fact, the GoDaddy stock price is slightly above $80 as I’m writing this. It’s the fifth time that the bulls have attempted to break through this level. They failed four times in the past. Will this time be different?

They probably would have done it in February if the pandemic hadn’t wrecked the economy. Now they have another shot at smashing that invisible ceiling.

What they need, more than anything, is volume. The bulls need a high number of buyers in order to finally get past that frustrating, long-standing hurdle. Thus, the daily trading volume is something to keep an eye on during the next few trading sessions.

Growing Big by Serving the Small

Ignore small businesses at your own peril: that’s the crux of a message that GoDaddy CEO Aman Bhutani wants people to hear during the pandemic.

Sometimes they’re called “micro-businesses” due to their small size. But collectively, these companies control a great deal of capital. And, GoDaddy has been effectively targeting these micro-businesses for years.

You might have even seen GoDaddy’s advertisements aimed at smaller entrepreneurs. The idea being conveyed by the ads is that every business, big or small, can effectively market themselves itself using a website.

GoDaddy has grown its business over time by courting micro-businesses. Bhutani, its CEO, observes that the Covid-19 pandemic has forced small companies to get creative, creating a win-win dynamic for the economy generally:

“Amid a global pandemic, everyday entrepreneurs are finding ways to create business opportunities to benefit themselves, their families, and their communities… The impact of these micro-businesses is collectively very large and represents a critical – if often overlooked – contributor to local economies and the national economy.”

Staying Strong in Q2

That’s all fine and good, but does the data suggest that GoDaddy stock will rise further? The company’s second-quarter fiscal results speak volumes and suggest that the company is in the midst of a powerful upward trajectory. It reported:

  • $806.4 million in revenues, up 9.4% year-over-year (YoY)
  • International revenues of $266.1 million, up 7.4% YoY
  • Total bookings of $936.3 million, an increase of 10.7% YoY
  • Revenues from domains of $369.6 million, marking a 10.5% YoY increase
  • Revenues from hosting and presence of $292.2 million, indicating a 4.4% YoY improvement
  • Over 400,000 net new customers added during the quarter

That last bullet point is especially salient as GoDaddy now has more than 20 million paying customers, a record for the company. As a consequence, it certainly appears that GoDaddy’s bet on small-scale businesses is paying off in spades.

The Bottom Line on GoDaddy Stock

GoDaddy is more than just an e-commerce success story. It’s a company that dared to cater to the smallest among us. And that, for what it’s worth, is a strategy that I’m proud to stand behind.

As of this writing, David Moadel did not hold a position in any of the aforementioned securities.

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