Is Verisign “immune from coronavirus”?

Immune might be too strong of a word, but it’s a safer bet than many other businesses.

This weekend I calculated how much domain name stocks have fallen in the stock market rout. Verisign (NASDAQ: VRSN) fell less than other domain stocks, and I wrote, “It makes sense that the stock wouldn’t be as hard hit as the overall market. It delivers consistent, subscription-based revenue that is likely to go up as it’s allowed to raise prices.”

An author on SeekingAlpha went a step further today, publishing a post arguing that “Verisign Is Immune from Coronavirus.”

Ash Anderson, who was not long on Verisign stock at the time of publishing, gives a long list of reasons that he thinks Verisign won’t be impacted. He also provides an excellent summary of Verisign’s business:

To convey what VeriSign does in the fewest words, imagine a toll road. If you’re on it, you’re paying. Well, VeriSign is that, but for the internet. For every .com domain name registered, the company collects $7.85 per year for every .net registered, a little bit north of $9. With no competition around, they are the internet’s toll road.

Recurring subscription businesses like Verisign, especially those that collect on an annual basis, should be OK if the coronavirus impacts are short-lived. They might have some exposure on new adds during a brief downturn, but they can move levers (such as heavy discounting) to make up for it.

I think the most significant risk would be if ICANN delays a decision on allowing it to increase prices. I don’t think this will happen, but should ICANN put this on the back burner during the crisis, or decide that now is not an appropriate time to move forward, it would delay the date at which Verisign can raise prices 7%. We’re just talking about a short delay, however.

I agree with the author that, in these turbulent times, Verisign is one of the better bets on the stock market.