GoDaddy faces securities probe after 14% stock drop on pricing disclosure

GoDaddy shares fell 14 percent after the company disclosed a promotional pricing strategy for dotcom domains, prompting Rosen Law Firm to investigate potential securities claims against the domain registrar.

"Rosen Law Firm continues to investigate potential securities claims on behalf of shareholders of GoDaddy Inc. resulting from allegations that GoDaddy may have issued materially misleading business information to the investing public," the global investor rights firm said in a statement Aug. 19.

The firm encourages investors with losses exceeding $100,000 to inquire about joining the prospective class action, which operates on a contingency fee basis with no out-of-pocket costs. Rosen Law Firm ranked No. 1 by ISS Securities Class Action Services for number of settlements in 2017 and has placed in the top four each year since 2013, recovering billions for investors including more than $438 million in 2019 alone. Founding partner Laurence Rosen was named a Titan of Plaintiffs' Bar by Law360 in 2020.

The investigation follows GoDaddy's disclosure that high demand for a promotional pricing strategy on dotcom domains led to a 14 percent stock price drop. Kaplan Fox & Kilsheimer LLP has opened a separate investigation into potential securities violations by the company, which trades on the New York Stock Exchange. The probe centers on whether GoDaddy misrepresented key business metrics or risks, potentially inflating its stock price before the information was corrected.

GoDaddy's latest results showed sales guidance narrowed to $5.215 billion to $5.255 billion, with second-quarter earnings per share rising 29.8 percent year over year to $1.83. A successful class action could expose the company to significant financial penalties and reputational damage, adding pressure on a stock already under scrutiny. Wedbush Securities analyst Ygal Arounian maintained an Outperform rating but cut the price target to $93 from $109, while J.P. Morgan kept an Overweight rating and trimmed its target to $124.

The probe raises the risk of litigation costs and settlement payouts that could weigh on GoDaddy's cash reserves. Investors will watch for any formal class action filing and the company's next earnings report for updated guidance.

This article is for informational purposes only and does not constitute investment advice.