Securities lawsuit alleges .com promo conflicted with the company’s public statements about targeting high-spending customers.
A GoDaddy (NYSE: GDDY) stockholder has filed a securities lawsuit against the company, alleging the company misled investors about its customer acquisition strategy while running a heavily discounted .com promotion.
Plaintiff Raymond Johnson, with the assistance of law firm Kaplan Fox & Kilsheimer LLP, filed the suit (pdf).
The lawsuit is seeking class action status for investors who bought GoDaddy shares between September 3, 2025, and February 24, 2026.
The crux of the case is GoDaddy’s decision to offer a $4.99 .com registration promotion with a one-year term.
Demand was higher than expected, which hurt bookings and near-term revenue results.
The complaint alleges that GoDaddy did not tell investors about the promotion, even as executives repeatedly emphasized the company’s strategy of attracting “high-intent” customers who spend $500 or more.
GoDaddy shares slid 14% to $79.12 the day after GoDaddy disclosed the promotion’s financial impact in February. (Shares closed Friday at $97.07.)
Here’s one that most don’t realize. GoDaddy has a brand new scheme to make up for their stock drop.
GoDaddy’s e-commerce department does it’s own underwriting (automatic conflict of interest). Instead of straight approving or rejecting the e-commerce clients and merchants looking to use their services, merchants are given two option once payments the are processed and have cleared the card holder’s account. 1- GoDaddy holds the client’s money for 120+ days. OR 2- Refund the payee MINUS the processing fees. Here’s where the issue comes into play… It’s illegal to keep credit card processing fees IF the transaction is not fully processed and paid. Also, credit card companies only allow for two billing cycles to dispute the charges. If a charge is disputed the merchant is black listed and placed on a MATCH list prohibiting them from accepting credit cards for 5-7 years.
To avoid this MATCH list, merchants will eat the expensive processing fees and take the loss (GoDaddy profits). OR, they’ll wait the 120 days while Godaddy hit’s the remaining balance with even more fees and charges. GoDaddy is not only profiting on the fees from both but are holding the merchant’s money in interest accruing accounts making money from the interest. This is similar to what banks do with their holdings. However, without the knowledge of the merchants.
So essentially, once the transaction is made- too bad, so sad…. Merchant has lost and GoDaddy is raking in the money.