GodaddyInc (NYSE:GDDY) publicized its plans to get into a contract with Marchex, Inc. (NASDAQ:MCHX). The contract will allow Marchex to hand over 200,000 domain names to Godaddy for $28.1 million cash.
The company’s Senior Vice President, Mike McLaughlin pointed out that this was a great opportunity or the company to push these high-quality domain names into the public market. They have previously not been available to the public. The company plans to make them available particularly to businesses so that they can increase their potential for success.
Godaddy’s shares were not so active in the market. Upon the release of the news, the shares went up by 12%. The company’s shares have gone up by 24% since it went public on April 1 until now.
The positive response by the stock market suggests that Godaddy’s purchase is a good thing. This might not necessarily be the case. One argument for this is the fact that the selling company (Marchex) had not been making very admirable profits while it owned the domains. Marchex had reported that it had made $240 million from the domain portfolio within the last ten years. The company also reported revenues amounting to $14.5 million in 2014. Compared with other firms, those profit margins are very low.
Marchex’s low performance might not necessarily trickle down to Godaddy. The decision to make the stock available to the public might be the push needed to rake in big bucks from the domain portfolio. Marchex had also planned to make the portfolio available to the public back in 2013. However, their proposal was declined. The company now plans on keeping its focus on the mobile advertising scene.
Godaddy, on the other hand, has big plans with its new online venture opportunity. New domains with the .cyz format are promising and will probably attract more clients. The .com domains are losing popularity perhaps because they are two monotonous. Domain prices are expected to reduce so as to give businesses more motivation to buy the new domains.
