Why GoDaddy's Stock Swooned on Friday

Key Points

• GoDaddy's Q2 earnings jumped to $1.41 per share, slightly beating the consensus estimate of $1.38.

• The stock fell more than 11% because investors expected a bigger earnings surprise.

• Today's price drop could create a buying opportunity for growth-focused investors.

• 10 stocks we like better than GoDaddy ›

Shares of GoDaddy (NYSE: GDDY) fell as much as 11.5% on Friday, following a solid earnings report with modest guidance. By 3:30 p.m. ET, the domain name registrar's shares had dropped by 11%.

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GoDaddy's modest earnings beat

GoDaddy's second-quarter sales rose by 8% year over year, stopping at $1.21 billion. Earnings jumped from $1.01 to $1.41 per diluted share. The analyst consensus pointed to earnings near $1.38 per share with a top-line revenue target right in line with the reported figures.

GoDaddy also issued third-quarter and full-year revenue guidance roughly on par with the current analyst views. In short, GoDaddy performed almost exactly as expected with a slight lean to the upside.

When barely beating expectations isn't enough

So why did the stock fall more than 11% on this robust report? Because the slight earnings surprise just wasn't impressive enough.

GoDaddy isn't a terribly expensive stock, but it has outperformed the broader market in the last three years. Its financial results don't always beat the Street targets, but when they do, the surprises tend to be large. This mild outperformance just wasn't enough.

The price drop may have opened a buying window for growth investors, though. GoDaddy's revenue is rising and its margins are growing wider. And the company is taking advantage of recent share price cuts, investing $906 million in share buybacks in the first half of 2025. I see it as a vote of confidence in GoDaddy's business prospects, suggesting that investors could follow the same strategy.

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Anders Bylund has no position in any of the stocks mentioned. The Motley Fool recommends GoDaddy. The Motley Fool has a disclosure policy.