One investor long Rightside Group Ltd (NAME) wrote a piece on Seeking Alpha that the market does not recognize how the new gtlds will affect the bottom line. The author points out how the margins are much bigger on a new gtld as opposed to something like a .com or .net registration. He also highlights the benefit of the being the house (registry).
The author did put some decent work in on the article (Caveat: He is long the stock) which is 7 pages long. If you are interested in the stock yay or nay, it is worth a read imo.
Here is the summary:
Summary
- After quitting low quality ad service the company is bleeding cash with razor thin margins on its current business.
- GTLDs represent a major shift in the way domains are used on the Internet.
- The company bought the right to function as a registry for 33 unique gTLDs which is a major difference from its registrar business.
- Revenue per gLTD domain sold is between $20-$30 instead of $1 for a traditional TLD.
- Because of the tremendous operating leverage within the business model a major % of gross margin expand falls to the bottom line.
Read the full article on Seeking Alpha
Author Disclosure : I do not have a position in NAME, Name.com the registrar was an advertiser on TLDinvestors.com of which I am the owner, that advertising relationship ended at the end of August.
Stock valuation is largely about future earnings potential. Prior to 2014 the new TLDs comprised zero percent of the domain aftermarket while .COM, .Net and CCTLDs were the bulk of aftermarket sales. TLDs like .CO, .TV, .ME, .Info are what – maybe 5% total of aftermarket sales if that. The vast majority of new TLD registrants are domain investors who hope for an aftermarket in new TLDs to materialize. But how long will those renewals last if no meaningful aftermarket develops? Look at .TV, .ME, .Info, .CO sales as a percentage of total aftermarket sales as an indicator of how much interest there is in any TLD other than .COM or the local CCTLD. The new TLDs remind me of all the condo construction in downtown Miami in 2006 / 2007 – creating far greater supply than the market had any need for.
Nice find Raymond. Although I have no interest in investing in the new GTLD’s at this stage, it’s definitely not all about registration numbers as the author notes. I believe it was Mike talking about .rich on DomainSherpa and even with a tiny amount of registrations, it’s possible they may be considered a success given their high registration fees of around $2k per domain (if they can keep or add to their base each year).
Goes to show that depending on how you look at things, one businesses success may be considered a failure in the eyes of another.
Exactly, and thanks for the comment. I have pointed out Dot Luxury a couple times, no domainer could make make money with that extension, but Monica and her team are doing just fine.