Activist investor Starboard Value is urging
GoDaddy
to take steps to create more value for shareholders, including cost cuts and other operational improvements that would increase profits and lift its stock price. It also said the company should consider other avenues, such as a possible sale.
In a letter sent to the web-services provider on Tuesday, Starboard said it is has been “disappointed by
GoDaddy
‘s operational, financial, and stock price performance” over the last 18 months. It also said the stock is undervalued, trading at a nearly 40% discount to peers.
Coming into Tuesday’s session, GoDaddy stock has slipped 1.5% this year. Its shares rose 2.4% in premarket trading.
Starboard holds about a 7.8% stake in GoDaddy (ticker: GDDY), making it the company’s third-largest shareholder, according to the letter. The investor said it sees opportunities for management to make strides in operating and financial performance—including margin expansion—with even just moderate revenue growth. It suggested further cost cutting, regardless of progress in revenue growth.
Starboard also suggested that if GoDaddy doesn’t meet its goals, the company should “remain open-minded about alternative value creation opportunities,” including a potential sale.
Lastly, the activist investor said the website has continually rejected its requests for a direct role on the board.
“We find this deeply concerning, particularly during a time when GoDaddy has repeatedly missed its commitments and generated poor shareholder returns,” Starboard wrote in the letter.
GoDaddy didn’t immediately respond to a request for comment.
Write to Emily Dattilo at emily.dattilo@dowjones.com
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