GoDaddy Drops 40% on Slower Growth

 Hadar.Goldberg
 
  Hadar.Goldberg
 
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Hadar Goldberg is a talented financial journalist with a strong passion for analyzing the stock market. She has a deep understanding of financial markets and is skilled at conducting research and analysis to uncover valuable insights for her readers. Hadar is known for her ability to explain complex financial concepts in a clear and concise manner.
 

•  25 Feb 2026
 

•   GDDY  
   
  +2.81%
•   WIX  
   
  +3.60%

$GDDY has fallen nearly 40% since the start of 2026. The decline is not driven by losses or weak margins. It reflects a reset in growth expectations and rising concern about competitive pressure in AI-driven website tools.

In the fourth quarter, GoDaddy delivered adjusted earnings of $1.80 per share, up from $1.36 a year ago and well above the $1.58 consensus estimate. Revenue reached $1.27 billion, in line with expectations. On the surface, the numbers were solid. Yet the market reaction was severe because forward guidance and bookings told a different story.

For 2026, management expects revenue between $5.195 and $5.275 billion. The midpoint implies roughly 6% growth, slightly below prior analyst forecasts near $5.29 billion. The gap is not large, but it signals moderation at a time when investors want acceleration. More concerning was bookings of $1.28 billion in the quarter, below the $1.31 billion expected. Bookings matter because they indicate future revenue momentum. A miss here raises questions about demand quality.

Part of the slowdown appears linked to a revised go-to-market strategy. The company introduced more promotional pricing and shorter-term contracts to attract small and mid-sized businesses. This approach may increase customer count, but it reduces initial contract size and delays revenue expansion. Over time, higher attach rates and product upgrades could close the gap between bookings and revenue. For now, the market sees execution risk.

Competition is also intensifying. Platforms such as $WIX and $SQSP have invested heavily in AI tools that simplify website creation and online commerce. GoDaddy has launched its own AI platform, Airo, designed to automate branding and site development. However, current guidance suggests that AI-driven upsell and premium conversion are progressing more slowly than investors hoped.

Technically, the stock move toward the mid-70s places it at levels not seen since late 2023. The nine-day losing streak in January marked the longest in its public history. Such price action often reflects institutional repositioning rather than retail selling. The fact that the broader SPX and IXIC indices advanced while GoDaddy declined sharply highlights stock-specific derisking.

What may be underappreciated is the earnings resilience. Despite slower top-line growth, profitability improved meaningfully year over year. If management stabilizes bookings and demonstrates that AI tools can lift lifetime customer value, the current valuation could look conservative. On the other hand, if growth remains stuck in the mid-single digits while competitors accelerate, multiple compression may continue.

This is not a simple turnaround story. It is a question of timing and execution. The next few quarters must show that customer acquisition quality is intact and that AI integration supports durable expansion, not just marketing headlines.

Those willing to look beyond the immediate downgrade cycle may find value, but patience and close monitoring are required. Deeper analysis of unit economics and competitive positioning will determine whether this reset is an opportunity or a warning.

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