GoDaddy’s 14% Plunge as Earnings Misses and AI Lags Sink S&P 500’s Worst-Performing Stock to 165th in Daily Trading Volume

Market Snapshot

GoDaddy (GDDY) experienced a significant selloff on February 25, 2026, with its stock plummeting 14.28% to $77.34, marking the largest single-day decline since March 2020 and the worst performer in the S&P 500. The stock closed at its lowest level since November 2023, trading near its 52-week low of $86.78. Trading volume surged 125.41% to $730 million, ranking 165th in market activity for the day. Year-to-date, the stock has fallen 26%, underperforming the broader market, which gained 0.6% in the same period.

Key Drivers

The sharp decline in GoDaddy’s stock followed the release of its fourth-quarter earnings report, which revealed two critical missteps: a $1.28 billion bookings figure that missed estimates of $1.31 billion and 2026 revenue guidance below Wall Street expectations. While adjusted earnings per share (EPS) of $1.80 exceeded forecasts of $1.58, the bookings shortfall signaled weaker demand. The Applications & Commerce segment, a core growth driver, saw bookings growth decelerate from 14% in Q3 to 11% in Q4. Analysts attributed this to the company’s new promotional pricing strategy, which prioritized attracting new customers through discounted one-year contracts. While this approach added 9,000 new customers in Q4 (up from 4,000 in Q3), it led to lower upfront revenue recognition, raising questions about the sustainability of the growth model.

The revenue guidance for 2026—$5.195 billion to $5.275 billion—fell short of the $5.246 billion midpoint expected by analysts. This shortfall, combined with the bookings miss, prompted immediate reactions from Wall Street. RBC Capital slashed its price target from $200 to $100, citing a “more realistic AI-discounted multiple,” while JPMorgan reduced its target to $167 from $200. UBS, Cantor Fitzgerald, and Barclays also cut targets, with Cantor Fitzgerald suggesting the company could consider going private to avoid public market pressures. The rapid downgrades reflected investor skepticism about GoDaddy’s ability to balance short-term growth incentives with long-term profitability.

A second layer of concern centered on GoDaddy’s AI integration, which analysts noted lags behind competitors like Wix.com and Squarespace. Despite management highlighting progress in AI-driven product development, the earnings report failed to quantify how the new go-to-market strategy impacts the Applications & Commerce segment. RBC analysts warned that the shift to shorter-term contracts and discounted pricing could exacerbate near-term booking pressures, even as free cash flow guidance of $1.54 billion over the past 12 months exceeded estimates. This duality—strong cash generation paired with weak bookings—created uncertainty about the company’s ability to scale its AI offerings profitably.

Compounding these issues, insider sales and institutional ownership dynamics added near-term sell pressure. The CEO and CFO sold shares in early December, part of a broader trend of insider divestments. Additionally, institutional investors hold about 90.28% of the stock, amplifying sensitivity to analyst downgrades and market sentiment shifts. The stock’s 47% decline over the past year and its current valuation at a 13.39 P/E ratio further underscored investor caution, with many analysts now viewing GDDY as a speculative bet rather than a core holding.

The combination of operational missteps, strategic ambiguity, and competitive challenges has left GoDaddy in a precarious position. While its free cash flow generation and margin expansion (to 24.9% in Q4) remain positives, the market appears to be discounting future growth prospects. Analysts will likely continue to monitor the company’s ability to reconcile its promotional pricing strategy with sustainable bookings growth and AI-driven differentiation in a crowded web development space.