Simply Wall St
5 min read
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Wondering if GoDaddy at around $126 a share is a bargain in disguise or a value trap? You are not alone, and that is exactly what we are going to unpack here.
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The stock is up 1.8% over the last week but still roughly flat over 30 days. Those short term moves sit against a sharp year to date slide of 36.6% and a 38.4% drop over the last year, despite gains of 68.6% over 3 years and 50.8% over 5 years.
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Part of this volatility reflects shifting views on GoDaddy’s role in the broader online business and domain market, especially as competition in website building, e commerce tools, and digital presence platforms intensifies. At the same time, investors are digesting updates on strategic initiatives such as expanding its commerce tools and bundling higher value subscription services that could reshape its longer term growth narrative.
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Despite the rocky share price, our valuation framework suggests GoDaddy scores 5 out of 6 on our value checks. We will break this down using several valuation methods before circling back to an even more powerful way to think about what the stock is really worth.
Find out why GoDaddy’s -38.4% return over the last year is lagging behind its peers.
A Discounted Cash Flow model estimates what a business is worth today by projecting the cash it can generate in the future and then discounting those cash flows back to the present. For GoDaddy, the model used is a 2 Stage Free Cash Flow to Equity approach, based on cash flow projections in $.
GoDaddy generated trailing twelve month free cash flow of about $1.52 billion, and analysts, along with Simply Wall St extrapolations, see this rising to around $3.10 billion by 2035. Intermediate forecasts, such as roughly $2.30 billion by 2029, reflect an expectation that GoDaddy can steadily grow the cash it returns to shareholders as it scales higher margin subscription and commerce services.
When all these projected cash flows are discounted back using an appropriate rate, the model arrives at an intrinsic value of about $254.30 per share. Compared with the current share price of roughly $126, the DCF implies GoDaddy is trading at about a 50.4% discount to its estimated fair value, which indicates potential upside if these cash flow assumptions prove broadly accurate.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests GoDaddy is undervalued by 50.4%. Track this in your watchlist or portfolio, or discover 898 more undervalued stocks based on cash flows.
