Company that is shorting Tucows releases report blasting company.
The same anonymous stock research group that targeted Web.com about four years ago is now going after Tucows.
Copperfield Research released a report about the domain name, mobile and broadband company titled “Cashing in on Neo-Nazis, Child Porn, & A Hidden Lawsuit as Insiders Dump”. The report’s authors have a short position in the company.
The report highlights three major grievances with Tucows (NASDAQ: TCX), a company whose stock doubled in price last year: all three of its business segments have issues, it is helping people operate unsavory websites, and it hasn’t disclosed its imminent loss of domains to Namecheap.
The hyperbole-filled report has some valid points, but I’m the type of person who sees a few misleading statements and then assumes that many of the other statements are wrong.
For example, the report blasts Tucows for its high churn rate when it took over the subscriber base of failed MVNO RingPlus. However, Tucows explicitly stated in earnings calls that it expected very low conversion from this group because RingPlus offered free service.
Also, the report devotes significant ink to a handful of bad websites that have registered their domains within the Tucows ecosystem. The report cites multiple websites with domain names that are registered at Tucows but does not draw a distinction between hosting and domain registration. It amusingly blasts the qualifications of one of Tucows’ compliance offers because she also like to DJ in her spare time.
On the NameCheap issue, it will be interesting to see how much of an impact the loss of Namecheap’s domains will have on Tucows. The revenue hit is real but the profit hit is unclear.
Shares in Tucows are down about 8% today. After opening the year around $70 they are now trading for $55.
JBB says
Trying not be happy about this. They went from being and OK company to terrible.
Anthony Mitchell says
Every good company has aspects about it that could be improved. Fortunately for Tucows, its issues can be remedied.
Tucows could boost revenue merely by straightening up eNom’s domain-registration process to more closely resemble Uni’s, whereby available domains (in various extensions, including those domains that are available in the secondary markets) can be listed in order of increasing price, with names that are not immediately available being listed in a separate tab.
Right now it’s too time consuming to scroll down through eNom’s search results to find an available domain within my desired price range and with a suitable extension, if an exact-match domain is not immediately available.
During the registration process, Uniregistry places domains from their secondary market at the top of search results for available domains, and in a distinctive box, which is great for buyers and sellers, because it showcases premium inventory. The heuristics for showcasing non-exact matches among premium domains on offer at Uni is also top notch, and they have the good sense to not go too-far afield with heuristics in presenting non-premium domains.
Tucows has a good tech crew. They can do this. As far as eliminating garbage domains from management, that’s an issue for every company in the industry.
John Berryhill says
“The hyperbole-filled report has some valid points, but I’m the type of person who sees a few misleading statements and then assumes that many of the other statements are wrong.”
Much of it is a truly bizarre screed. “OMG, one of their employees is a DJ!” So what? So is the VP of global policy at Markmonitor.
And the pieces about “We don’t know much about Paul Karkas, but we’ll do a drive-by out-of-context smear against him anyway,” is equally absurd. I have known Paul for nearly 16 years. He is utterly professional, tactful and highly knowledgeable.
As someone who is occasionally given to writing juvenile screeds, I have to concede that this pile has outdone me.