With Go Daddy shares set to start trading today, are you going to buy stock or are you negative on the offering ?
James Gellert from Rapid Ratings told CNN he is not high on the stock.
‘Elevated’ financial risk: Investors want to know: Will GoDaddy shares be off to the races like Patrick’s No. 10 car or will they crash and burn?
“I would say the caution flag is up,” said James Gellert, CEO of Rapid Ratings, a firm that rates the financial health of public and private companies.
Even though GoDaddy was founded 18 years ago, it still looks like an immature Internet company. It’s burning cash and is unprofitable. GoDaddy posted a loss of $143 million last year. While that’s an improvement from prior years, the company lost $622 million in the past three years.
GoDaddy also carries lots of debt, most of it related to a 2011 leveraged buyout by private-equity firms that included KKR (KKR).
All of this explains why Rapid Ratings gives GoDaddy a financial health rating of just 24 out of 100, indicating an “elevated” risk of default. By comparison, burger joint Shake Shack (SHAK) was sporting a rating of 85 when it went public earlier this year.
GoDaddy has “good market share in its niche, a recognizable name and cool colors. Those are about the only good things you can say,” said Gellert.
Read the full article on CNN Money