VeriSign (VRSN) stock is falling today on reports that Sen. Elizabeth Warren (D-MA) has called for an investigation into the company. A leader in the custom .com and internet infrastructure space, VeriSign may be in trouble. According to a letter sent by Warren and Rep. Jerry Nadler (D-NY) to the U.S. Department of Justice (DOJ), the company has been abusing its power by significantly overcharging customers unnecessarily. The politicians also sent this letter to the National Telecommunications and Information Administration (NTIA), a division of the U.S. Department of Commerce.
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What’s Happening with VeriSign Stock?
VeriSign stock has been trending downward all day as news of Warren’s investigation proposal continues to trend. As of this writing, it is down 2% for the day and on track to close out the day in the red. Until today, VRSN stock had actually been rising slowly and remains in the green for the past five days. And although trading has been somewhat volatile, VeriSign has made progress over the past six months, rising 6% through difficult market conditions.
This growth may be compromised if an investigation is launched, though. Known for her antitrust stances and battles against corporate monopolies, Senator Warren has targeted major tech companies for similar actions. She and Nadler’s letter allege that VeriSign has raised its prices to unnecessarily high levels without actually improving any of its services. “VeriSign hasn’t changed or improved its services; it has simply raised prices because it holds a government-ensured monopoly,” the letter states.
WIRED reports that a few months ago, VeriSign discussed this in a blog post, claiming that it holds no monopolies because it controls only the .com portion of the internet, while “1,200 generic top-level domains” still belong to different entities. However, that doesn’t mean that an investigation isn’t warranted or that the company is not guilty of the violations that the letter assesses.
Is VeriSign Stock a Buy, Sell, or Hold?
In the past three months, only two Wall Street analysts have issued takes on VeriSign. As such, it is difficult to assess which rating it deserves based on expert opinion. The most recent rating, however, is from Robert W. Baird analyst Robert Oliver, who maintains a Hold rating. As TipRanks’ Jason Carr reports, VeriSign has “reduced its domain name growth guidance due to ongoing pressures in the U.S. and China markets.”
Now, the company is facing new pressure from Capitol Hill, which could lead to more problems in the coming months. VRSN stock is facing multiple obstacles that will likely impede its growth on top of already difficult market conditions.
