VeriSign (VRSN 2.75%) has defied the recent stock market sell-off, with shares rising 19% year to date.
The company continues to benefit as the sole registry operator for .com and .net domains, playing a pivotal role in internet services. However, a dynamic tech landscape, marked by the rise of alternative domain names like .ai and .io, has introduced uncertainty about VeriSign’s long-term industry dominance.
With the stock nearing its all-time high of $256 set in 2021, can the rally keep going? Or is it time for investors to disconnect? Let’s discuss what to do with VeriSign shares now.
VeriSign: A classic Buffett stock
For more than two decades, VeriSign has held exclusive rights to operate the .com and .net domain registries, secured through a long-standing partnership with the Internet Corporation for Assigned Names and Numbers (ICANN), an independent global governance body. For this monopoly-like position, VeriSign is responsible for managing the technical infrastructure while ensuring security protocols and network stability. The business operates as a wholesaler, providing domain addresses at fixed prices to user-facing platforms like GoDaddy and Squarespace alongside cybersecurity solutions.
In many ways, VeriSign’s unique profile reflects the philosophy of legendary investor Warren Buffett, who has long favored relatively simple companies with a lasting competitive advantage coupled with strong profitability and predictable cash flow.
By this measure, it’s unsurprising that Buffett’s Berkshire Hathaway conglomerate has held the stock since 2012. According to a recent Securities and Exchange Commission filing, Berkshire now owns a 14% stake in VeriSign, valued at $3.3 billion, having increased its position since December 2024. This timing aligns with VeriSign’s October announcement that it renewed its registry agreement with ICANN through 2030, ensuring operational continuity until the next likely rights renewal. While the reasoning behind the purchase remains undisclosed, the move signals confidence in the company’s fundamentals.
Image source: Getty Images.
Despite the total number of VeriSign’s registered domains, 169 million, declining by 2% year over year in 2024, the company has leveraged its contractual ability to raise prices annually, driving growth. For the year ended Dec. 31, VeriSign’s total revenue rose by 4.3%, while its earnings per share (EPS) of $8 was 1.3% higher than in 2023. Expectations point to further gains, with Wall Street analysts projecting a 4.2% revenue growth rate in 2025 and a stronger 8.5% increase in EPS.
Investors who believe VeriSign will remain the backbone of the internet for decades have compelling reasons to buy and hold the stock for the long term.
| Metric | 2024 | 2025 Estimate |
|---|---|---|
| Revenue | $1.56 billion | $1.62 billion |
| Revenue growth (YOY) | 4.3% | 4.2% |
| EPS | $8 | $8.68 |
| EPS growth (YOY) | 1.3% | 8.5% |
Data source: Yahoo! Finance. YOY = year over year.
The case to sell VeriSign stock
The rapidly evolving landscape of both the internet and technology has raised questions about whether the company’s .com and .net domain names will remain relevant indefinitely. Total registrations have fallen by 3% from their 2022 peak, with renewal rates also trending lower.
One concern is that as people’s web browsing habits shift, traditionally prominent top-level domains (TLDs) like .com have become less essential. Consequently, the market has seen surging growth in more unique TLDs, such as .app, .shop, and .io. For instance, .ai, assigned to and managed by the island nation of Anguilla, has exceeded 5 million registrations, soaring by over 400% in the past three years, fueled by its coincidental acronym link to artificial intelligence (AI).
A scenario in which demand for VeriSign’s exclusive TLDs continues to decline could directly affect its growth and earnings potential — a key risk for investors to weigh. Meanwhile, the stock trades at a forward price-to-earnings (P/E) ratio of 28. That nearly matches the company’s 10-year average earnings multiple of 30.
Investors who believe VeriSign’s long-term outlook will falter in curbing the decline of .com registrations might consider selling the stock or avoiding it for now.
VRSN PE Ratio (Forward) data by YCharts
Decision time: I’m sitting on the sidelines
Following the spectacular rally in VeriSign shares over the last few months, I’m more cautious now with a sense that the upside may be limited. There are enough positives in the company’s near-term outlook to support holding the stock, but new investors may find better opportunities elsewhere in the stock market with more compelling growth and value.
Dan Victor has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway and VeriSign. The Motley Fool recommends GoDaddy. The Motley Fool has a disclosure policy.
