GoDaddy Stock Surges 57.7% YTD: Will the Bull Run Continue?

GoDaddy‘s GDDY shares have outperformed the Zacks Computer & Technology sector as well as its peers Shopify SHOP, BigCommerce BIGC and Alphabet on a year-to-date (YTD) basis.

While GDDY's shares have returned 57.7%, Alphabet increased 16.9%. Shopify and BIGC registered declines of 4.9% and 39.8%, respectively, year to date. The broader sector has appreciated 20.7% over the same timeframe.

GoDaddy's robust stock price performance has been driven by its better-than-expected financial results and impressive growth profile.

In second-quarter 2024, GDDY posted revenues of $1.12 billion, which increased 7% year over year on a reported basis and a constant-currency (cc) basis. The upside underscores its robust performance, particularly in the Applications and Commerce segment.

Strong Portfolio to Aid GDDY Shares Surge

GoDaddy's expanding portfolio has been a major growth driver of its success. In second-quarter 2024, GoDaddy Airo, an AI-powered experience, significantly boosted customer engagement.

More than a million new customers leveraged Airo and half a million actively engaged with it. This is expected to enhance future monetization and retention. In the coming months, GDDY plans to expand Airo into over 90 countries.

In the said quarter, GoDaddy stated that its internal AI-powered guide assist bot, GABI, now supports more than 60 languages. This advancement will further enhance customer interactions and operational efficiency.

GDDY's focus on small businesses and expanding clientele has been a key catalyst. In the second quarter, it launched the Digital Marketing Suite, offering personalized marketing tools to help users grow their business without a website.

In May, the company expanded its Small Business GenAI Prompt Library, offering more than 185 updated prompts and new capabilities to support small business owners globally.

Further expanding its footprint in digital marketing in August, GoDaddy introduced Digital Marketing, an all-in-one solution designed to streamline marketing efforts with AI-powered tools, social media integration and a unified inbox for small business owners.

GDDY Q3 Guidance Positive

GoDaddy's expanding portfolio is poised to attract numerous small businesses, which in turn will drive its top-line growth.

For third-quarter 2024, the company expects revenues of $1.13-$1.15 billion, indicating year-over-year growth of 7% at the mid-point.

The Zacks Consensus Estimate for third-quarter 2024 revenues is currently pegged at $1.14 billion, suggesting 6.83% growth over the figure reported in the year-ago quarter.

The consensus mark for earnings is currently pegged at $1.25 per share, up by a penny in the past 30 days.

GDDY's Stock Overvalued

The GoDaddy stock is not so cheap, as the Value Style Score of D suggests a stretched valuation at this moment.

In terms of the forward 12-month Price/Sales ratio, GoDaddy is trading at 5.50X, higher than its median of 3.86X and the Zacks Internet - Delivery Services sector's 1.61X.

GoDaddy currently carries Zacks Rank #3 (Hold), suggesting that it may be wise to wait for a more favorable entry point in the stock.

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