NEW YORK (TheStreet) -- VeriSign (VRSN) is plummeting on Monday after the National Telecommunications and Information Administration (NTIA) said it will surrender control of internet domain name management.
By late morning, VeriSign had taken off 7.4% to $50.80. Trading volume of 5 million was more than double its three-month daily average.
On Friday, the NTIA announced its intent to transition key domain name functions to the "global multi-stakeholder community."
"As the first step, NTIA is asking the Internet Corporation for Assigned Names and Numbers (ICANN) to convene global stakeholders to develop a proposal to transition the current role played by NTIA in the coordination of the Internet's domain name system (DNS)," the government body said in a statement.
However, VeriSign, which provides infrastructure for top-level domains such as .com, .net and .gov, said the announcement would not affect its operations.
"The announcement does not impact Verisign's .com or .net domain name business nor impact its .com or .net revenue or those agreements, which have presumptive rights of renewal," the company said in a statement.
"The NTIA announcement involves Internet functions that are entirely different functions from those Verisign performs under its .com and .net agreements. The functions performed by Verisign involved in the NTIA announcement have been performed as a community service spanning three decades without compensation," it continued.
Investment firm Cowen & Co. turned bearish on the news, cutting its rating to "market perform" from "outperform" and downwardly revising its target price to $49 from $63.
"With less U.S. control and without knowledge of what entity or entities will ultimately have power, we believe there is increased risk that VRSN may not be able to renew its .com and .net contracts in their current form," analysts wrote in the report.