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2014 in Review: Domain Name Stocks were a Bad Bet

Shares of most domain name companies were a bad bet in 2014.

This is the fourth in a five part series covering the top stories in the domain name industry in 2014. You can also listen to the companion podcast covering these five themes of 2014.

Investors in the S&P 500 stock index saw their sixth straight year of gains in 2014. Investors in most publicly traded domain name companies weren’t so fortunate.

Only two public domain name companies I track finished the year in positive territory, while six lost at least 40% of their value.

Yes, 40%.

Here’s a rundown of the winner and losers in 2014.

Winners

Tucows (NASDAQ: TCX) – Tucows smartly diversified beyond domain names a few years ago, and its mobile phone service Ting helped propel the company’s shares this year. It also started trading on the NASDAQ at the beginning of the year, bringing welcome analyst attention to the stock. Its stock jumped 39% from $13.95 to $19.41 this year.

Endurance International Group (NASDAQ: EIGI) rose 32% from $14.01 to $18.43 in its first full year of being a public company. The rollup continued its acquisition binge in 2014, completing the acquisition of Directi and acquiring BuyDomains.

Losers

Rightside (NASDAQ: NAME) started trading August 4 after being spun off from Demand Media. It hasn’t done well since then, but neither has Demand Media. Rightside shares were down 58% from $15.82 to $6.72 at the close of 2014. Rightside shares dropped significantly in December, probably due to investors taking a loss and Demand Media investors questioning what a domain name company was doing in their portfolio. (Little did they know that the domain business was propping up the content business at Demand Media!) Of course, had Rightside’s new TLDs taken off more in 2014, it probably could have staved off some of the drop.

Centralnic (LSE AIM: CNIC) was down a whopping 56% from 98.0p to 43.0p. It runs the backend for a number of new top level domain names, as well as multiple third level domain names. It bought Internet.bs in 2014.

Marchex (NASDAQ: MCHX) is another domain company that had a rough year, but it’s not because of problems in its domain business. Its click-to-call service lost business from a key customer and saw its stock drop like a rock. Shares opened the year at $8.59 and plummeted 47% to $4.59

Neustar (NYSE: NSR) lost 44% of its share value this year, thanks to the potential loss of a lucrative phone system contract. Shares opened at $49.75 and closed at $27.80.

Web.com (NASDAQ: WWWW) had a bad year, dropping 40% from $31.74 to $18.99. Its slide started when Google announced its entry to the domain name registrar market. The slide continued with revenue misses, a decision to end a customer segment that shaved a lot of revenue off, and otherwise poor execution.

Minds + Machines (LSE AIM: MMX) started the year trading as Top Level Domain Holdings, and then switched to Minds + Machines when it began its active new TLD business. Shares are down 40% from 14.12p to 8.50p. Keep in mind that the company issued new shares this year, so its overall value isn’t down by as much.

Verisign (NASDAQ: VRSN) was off nominally. The .com/.net registry was down 5%, opening the year at $59.74 and closing at $57.00.

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  1. Jay

    I’ll be spending some of the money I planned to spend on new TLDs into buying NAME stock because the price is currently good when taking into account they own second largest registrar Enom, the hipsteresque Name.com whose marketing strategy is almost as good as namecheap.com’s (who also happen to put their names on the Enom platform) and also pick the best expired names from their registrars to their own 300k domain portfolio ( which don’t get a bid on Namejet.com of which they own 50%).
    Namejet.com is the biggest expired domain marketplace and will stay as the biggest because Web.com is not gonna leave the money on the table they would be doing if they put their inventory into Snapnames.com

    The cherry on top is that NAME has the best new TLD portfolio and on top of that they have also deal with Donuts where they get to partly run and market the Donuts portfolio.

    50%-100% upside for the stock in 2015.

    Disclaimer:
    This is NOT investment advice.
    You should consult an investment professional before investing.

    Also don’t dry your cat in the microwave and coffee is hot 🙂

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