Correction, what correction?
05/10/18

If “GoDaddy” first brings to mind racy Super Bowl ads (check them out later; we have more important things to discuss), you may not be alone, but then you may also be unaware that the company has carved out nice home for itself in the internet domain business.

It’s the biggest house on the block, actually. GoDaddy is the world’s largest domain registrar and website host, currently managing more than 75 million domains for more than 17 million global customers.1

The following chart shows GoDaddy (GDDY) more than doubled the Nasdaq 100’s (NDX) percentage gain since late 2016 (90% vs. 40%), with the bulk of that outperformance occurring this year, as GoDaddy kept pushing higher while the NDX (and the rest of the market) has struggled to recapture its upside mojo.

GoDaddy (GDDY) vs. Nasdaq 100 (NDX), 12/13/2016 – 5/9/18. GDDY price chart. Relative strength

Source: OptionsHouse

Too much of a good thing for GoDaddy, contrarians might ask? Well, let’s review the tape: Like yesterday’s jump, the stock’s February 23 up gap (and subsequent rally) followed a well-received earnings release—but note the pullback that occurred before the stock ultimately moved higher. After the close on Tuesday, GoDaddy released Q1 numbers that hit earnings estimates on the nose and easily beat revenue forecasts2 (the latter being a regular occurrence for GDDY).

But one possible reason GoDaddy sported such heavy call options volume in the LiveAction scan shown in the above chart and shot up more than 5% intraday yesterday (see chart below) may have been the revelation that the company had increased its customer base by approximately 17% from a year ago (with more than a 1.5 million of its 17.7 million users coming from its 2017 acquisition of Host Europe). The company also showed its average revenue per user (ARPU) increased 6%.3 Not surprisingly, GoDaddy offered some optimistic forward guidance.

GoDaddy (GDDY) vs. Nasdaq 100 (NDX), 12/13/2016 – 5/9/18. GDDY price chart. Relative strength

Source: OptionsHouse

With tech regaining some of its former momentum in recent weeks, GDDY could potentially benefit from sector tailwinds if that trend remains intact in the near-term, even if the stock does give back some of its rally, similar to the way it did in February.

Market Mover Update: A 3% rally yesterday pushed June crude oil futures (CLM8) above $71/barrel for the first time since November 2014, one day after the White House pulled the US out of the Iran nuclear agreement (see chart below). The rally held despite Saudi Arabia’s pledge to help “mitigate the impact of any potential supply shortages.”4

June crude oil futures (CLM18), 2/23/18 – 5/9/18. June crude oil chartr. Iran deal killed, crude rallied

Source: OptionsHouse

Rate update: The 3% yield level might be losing some of its bogeyman status. Yesterday’s healthy stock market gains occurred despite the 10-year Treasury yield pushing back above 3%—an event that initially seemed to throw the market for a loop on April 24.

 

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1 TechRadar. Best domain name registrars of 2018. 3/1/18.

2 Zack’s. GoDaddy (GDDY) Q1 Earnings In Line, Revenues Beat Estimates.  3/1/18.

3 Reuters. Web hosting firm GoDaddy's revenue beats on customer additions. 5/8/17.

4 Bloomberg.com. Saudi Arabia Ready to ‘Mitigate’ Impact of Iran Oil Sanctions. 5/8/18.