GoDaddy (GDDY): the web stock on sale

2026-06-12 · By Lubin Danilo, founder of Lubin Investment

GoDaddy earns the top score on my quality grid: highly profitable, cash generous, buying back stock aggressively. Yet the market pays less than eight times its free cash flow. Its weak spot is soft sales growth. Here is why the cash makes up for it, and where the trap is.

• Quality score: 10/10 on my fundamental grid.
• Free cash flow margin of 26 %: out of 100 dollars of sales, 26 end up as cash truly available.
• Weak sales growth (about 7 % a year), the one real caveat of the thesis.
• But cash per share climbs fast (around 28 % a year), driven by heavy buybacks.
• Low valuation: under 8 times free cash flow, for a 10/10 quality.

GoDaddy is no longer what you think

For most people, GoDaddy is still the domain name seller from the cheesy ads. That image is ten years out of date. Today GoDaddy is an infrastructure platform for small businesses: website hosting, online presence tools, payments, marketing, and now AI-based assistants to spin up a store in minutes.

The typical customer is not a developer. It is a craftsperson, a shopkeeper, a freelancer who wants to exist online without understanding the tech. Tens of millions of such customers, paying a subscription year after year. That base is what interests me.

Why my grid gives it 10/10

I do not score a company on a hunch. I run it through concrete financial criteria: is it profitable, is its cash growing, does it buy back shares rather than issue them, is its debt manageable? GoDaddy ticks almost everything. Its net margin is around 17 %, and above all its free cash flow margin reaches 26 %. Free cash flow is the money that truly stays once every bill is paid. A 26 % margin is double the average company.

The tell on capital management: GoDaddy shrinks its share count by about 5 % a year. When a company buys back its own shares, each remaining share is a bigger slice of the pie. That is why its cash per share grows about 28 % a year, far faster than its sales.

The real caveat: growth

Now, the honest part. GoDaddy is no rocket. Its sales grow only about 7 % a year, below the 10 % threshold I like to see. This is the hosting and SMB tools market: mature, competitive, with Wix, Squarespace and Shopify pushing. A 10/10 score does not mean a perfect company. It means that across my objective criteria, the financial profile is solid. Soft growth is the trade-off to accept here.

What saves the thesis is capital allocation. A company that grows little but efficiently turns its cash into per-share value can still reward shareholders well. GoDaddy does exactly that: little revenue growth, but plenty of cash returned through buybacks.

Is it the right price?

That is the second question, which I always handle separately from quality. To measure price, I look at P/FCF (price-to-free-cash-flow): the share price divided by annual free cash flow. A P/FCF of 8 means you pay eight years of that cash. GoDaddy trades today at under 8 times its free cash flow. For a 10/10 stock, that is cheap: the market is pricing the mediocre growth, not the quality of the cash.

The risk to keep in mind: if growth does not pick up and competition erodes margins, that low price will be deserved. If instead the new AI tools revive subscriptions, the stock is unusually cheap. A low P/FCF is only a bargain if the quality holds.

That is the whole point of separating the two questions, quality on one side, price on the other. It is exactly what I wanted to do in seconds for any stock, so I coded it into my investing site. You can see the criteria in detail on the GoDaddy analysis page, the ranking of undervalued stocks and my full methodology.

FAQ

Is GoDaddy just a domain name seller?

Not for a long time. It has become an infrastructure platform for small businesses: hosting, websites, payments, marketing, AI tools. The domain name is only the entry point to recurring subscriptions.

Why 10/10 if growth is weak?

My score measures overall financial soundness: profitability, cash generation, margins, buybacks, debt. GoDaddy excels at almost everything. Soft growth is its weak spot, but it is not enough to drag down an otherwise very solid profile.

Is a P/FCF under 8 a bargain?

Only if the quality holds. A low price can reflect stalled growth. At GoDaddy, cash per share grows fast thanks to buybacks, which makes the low price more interesting than it looks, provided margins hold up.

Should you buy GoDaddy stock?

It depends on your conviction about its ability to defend margins against Wix, Squarespace and Shopify, and on your price discipline. This is not personalized investment advice, do your own research.

Voir l'analyse GDDY sur Lubin Investment

About the author

Written by Lubin Danilo, founder of Lubin Investment. A self-taught individual investor, I have analyzed stocks through their fundamentals for several years and invest my own money with this method. I codified it into a tool that judges a company's quality and its price separately, using criteria drawn from the financial literature (Warren Buffett, Michael Mauboussin, Aswath Damodaran).