On the heels of the upcoming Go Daddy IPO, Pando Daily listed 10 red flags for those thinking about investing. Some in my opinion are valid and some are not. Asking the question in red flag #3 “And besides, how much longer are small businesses going to need Web sites in an era when most are engaging with customers on Facebook, Twitter or other mobile apps?” Small businesses need to control their content on their own site, anyone advising them to use a walled garden with holes in privacy and data retention is foolish. The other point I would add is what about when today’s hot site is the next GeoCities or Friendster ?
Here is a look at the first three from the article:
Even if GoDaddy isn’t expected to be the hottest tech IPO this year, it’s still notable because of the high number of red flags that surround its offering – from annual losses to a dying market to a corporate structure that favors old investors over the new. Here are ten red flags we spotted.
Competition with Google.
Google used to offer GoDaddy’s domain-registration service as an option for its Google Apps customers. Last year, Google started handling registrations itself, including the newer dot-word domains, depriving GoDaddy of an important source of businesses not just for new domains but for web hosting as well. Having Google go from partner to competitor is rarely a positive development.
Investors don’t exactly love this space.
GoDaddy tried and failed to go public in 2006. Other companies in the sector have gone public over the years, and few are faring well. Web.com is down 49 percent over the past year. Wix.com is down 29 percent. One exception seems to be Endurance International, up 32 percent in the past year, although the company has posted net losses for years.
A dying market with low margins.
On the plus side, GoDaddy’s revenue has been growing around 23 percent a year. But it’s toiling in the kind of high-volume, low-margin business you see when a service becomes a commodity. And besides, how much longer are small businesses going to need Web sites in an era when most are engaging with customers on Facebook, Twitter or other mobile apps?
Read the other 7 on Pando.com
