What Happened?
Shares of domain registrar and web services company GoDaddy (NYSE: GDDY) fell 3.2% in the afternoon session after UBS lowered its price target on the stock, citing concerns over competition from artificial intelligence.
The firm reduced its price target to $160 from $215, a significant cut, while it kept its 'Neutral' rating on the shares. The change reflected worries about GoDaddy's position against rivals in the field of generative AI. UBS pointed out that competitors, such as Wix, had made acquisitions related to generative AI, whereas GoDaddy had not yet made a similar move. Analysts suggested that while GoDaddy's revenue might not see an immediate negative effect, the concerns about AI competition were difficult to disprove because of the rapid pace of change in the industry.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy GoDaddy? Access our full analysis report here, it’s free.
What Is The Market Telling Us
GoDaddy’s shares are not very volatile and have only had 5 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 7 days ago when the stock dropped 3.8% on the news that Federal Reserve Chair Jerome Powell delivered cautious remarks on the economy, spooking investors and pulling indexes back from record highs.
Speaking for the first time since the central bank's recent interest rate cut, Powell described the current economic landscape as a "challenging situation." He highlighted the difficult task of balancing a weakening labor market against persistent inflation risks. Powell also commented that equity prices appeared "fairly highly valued," adding to investor concerns and prompting profit-taking. The cautious tone from the Fed chair drove declines across major indexes, including the S&P 500 and the tech-heavy Nasdaq, as the market reassessed the path forward for monetary policy.
GoDaddy is down 30.9% since the beginning of the year, and at $137.49 per share, it is trading 35.9% below its 52-week high of $214.35 from January 2025. Investors who bought $1,000 worth of GoDaddy’s shares 5 years ago would now be looking at an investment worth $1,811.
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