Stock Story -
What Happened: Shares of website and ecommerce tools provider Squarespace (NYSE:SQSP) jumped 13.4% in the morning session after the company announced it has agreed to be acquired by private equity firms, Permira, in an all-cash transaction valued at approximately $6.9 billion.
Under the terms of the deal, Squarespace stockholders will receive $44.00 per share in cash. The purchase price represents a premium of approximately 29% over Squarespace's 90-day volume weighted average trading price and a premium of 15% over Squarespace's closing share price of $38.19 on May 10, 2024.
Is now the time to buy Squarespace? Find out by reading the original article on StockStory, it's free.
What is the market telling us: Squarespace's shares are not very volatile than the market average and over the last year have had only 8 moves greater than 5%. Moves this big are very rare for Squarespace and that is indicating to us that this news had a significant impact on the market's perception of the business.
The biggest move we wrote about over the last year was 11 months ago, when the stock gained 7.8% on the news that the company announced that it has agreed to acquire the assets associated with the Google (NASDAQ:GOOGL) Domains business, which includes about 10 million domains.
As context, market leader GoDaddy (NYSE:GDDY) had nearly 84 million domains under management at the end of 2022, and according to VeriSign (NASDAQ:VRSN), the largest industry registrar, there are roughly 350 million domains worldwide. This means Squarespace's deal represents almost 3% of the worldwide domains. It also is a positive from a competitive standpoint, as there was always worry that Google could use its scale and financial resources to suddenly invest in and dominate the domain market. Squarespace company will provide a smooth transition for customers and keep the same renewal prices for at least a year after the deal. Squarespace will also be the only domain provider for customers who buy a domain with their Workspace subscription from Google for at least three years. The deal was anticipated to have significant long-term benefits for Squarespace in terms of revenue and free cash flow.
Squarespace is up 35.9% since the beginning of the year. Investors who bought $1,000 worth of Squarespace's shares at the IPO in May 2021 would now be looking at an investment worth $989.69.
