VeriSign, Inc. (VRSN): A Bear Case Theory

Core Thesis - VeriSign, Inc. faces a challenging outlook over the next 12 months due to structural pressures in its core .Com domain business, despite a year-to-date (YTD) stock gain of approximately 30% [2][3][5] Financial Performance - As of December 2nd, VeriSign's share was trading at $253.67, with trailing and forward P/E ratios of 29.26 and 25.77 respectively [1] - The stock's YTD growth has been supported by high-churn registrars utilizing aggressive rebate programs, offering discounts of up to 50% [2][3] Market Dynamics - The growth in domain sales is deemed unsustainable as first-year promotional domains are expected to renew at lower rates, leading to a projected decline in VeriSign's .Com domain base by FY2026 [3][5] - Approximately 30% of .Com domains are parked, with advertising revenue from these domains collapsing by 85-90% following Google's ban on ads for parked domains, making it uneconomical for many non-operational domains to remain registered [4][5] Future Outlook - The combination of registrar-driven rebates likely not continuing at scale, renewal rates reverting, and impaired parking revenue creates near-term headwinds for growth and revenue [5] - FY2026 is anticipated to bring negative net .Com domain growth and pressure on overall revenues, indicating a compelling near-term risk for investors [5]