What happened
Shares of website-hosting service GoDaddy (GDDY -1.01%) were up 10% as of 12:50 p.m. ET Friday, according to data from S&P Global Market Intelligence. The surge followed Thursday evening's release of fourth-quarter numbers that beat analysts' estimates.
So what
For the quarter, GoDaddy brought in revenue of $1.02 billion and booked profits of $0.52 per share. Those numbers improved on its results of $874 million and $0.41 per share in the prior-year period. More than that, though, the company's fourth-quarter results topped the consensus expectations of analysts for around $970 million in sales and earnings of $0.41 per share.
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Domain registration revenue was particularly strong. Website operators appear to be coming to GoDaddy for complete turnkey solutions like its recently launched OmniCommerce platform, which offers small businesses point-of-sale equipment as well as a means of processing payments.
Now what
While the scope of Friday's move is exciting and an earnings beat is a good reason to bid up a stock, investors should be cautious about jumping into a new GoDaddy position today. This stock is no stranger to such moves, but usually, they are not meaningfully sustained. Most of GoDaddy's surges over the course of the past couple of years have been met with extreme profit-taking that drove the stock back down.
The good news is that those big sell-offs are also relatively short-lived, so any price weakness that manifests from here could be a good buying opportunity. Supporting its long-term thesis is the fact that, in the grand scheme of things, GoDaddy is seeing firm growth. Last year's top line was 15% better than 2020's, and analysts are modeling for revenue growth of more than 9% this year and nearly 11% next year. That's bigger-picture progress worth plugging into if you can wait for this volatile stock to pull back.
