GoDaddy, Inc. (NYSE: GDDY) is Arizona-based web hosting and domain name registration company, having a market cap of more than $8 billion. The ‘digital real estate giant' provides domain name registration, web hosting, cloud business apps, and online marketing services, currently serving around 17 million customers worldwide and managing more than 72 million domain names. The company generated a total revenue of $1.85 billion in 2016, compared to $1.61 billion in 2015, $1.39 billion in 2014, and $1.13 billion in 2013. GDDY is believed to be a high growth stock but investors are getting worried about the continuous slowdown in customer growth and an intensifying competition from companies such Wix.com. I did some research on GDDY and found some important information that might help you in deciding whether or not GDDY is a good stock to buy. In this article, we will take a look at an investment thesis on GoDaddy published in Value Investors Club in November by a user Fletch.

According to the thesis, GoDaddy Inc is the global leader in domain name registration space, managing more than 21% of 335 million domain names worldwide. Such a strong position allows GDDY “to have low customer acquisition costs, high retention rates and ability to sell additional products.” The thesis suggests that GDDY has “multiple ways of growing revenue” and the company is expected to grow its revenue more than “10% for the next five years.”

To compete with Wix.com and other companies in the website customization space, according to the thesis, Godaddy is spending heavily to improve its applications. The company's “name recognition and low customer acquisition costs should allow them to catch up in the growth of this business,” the thesis said.

While talking about the valuation, Fletch noted in the thesis that “GDDY trades at a discount” to competitors. However, Fletch believes that “GDDY should trade at a premium,” considering the company's “recurring revenue business, market leadership and consistent growth profile.”