DigitalOcean (NYSE:DOCN) Shares Down 7% - Here's Why

Key Points

• DigitalOcean shares fell 7% on Wednesday, with trading volume well below average as the stock moved from a prior close of $157.03 to around $146.
• Recent analyst coverage has remained broadly positive, with multiple firms raising price targets and the stock carrying a consensus “Moderate Buy” rating and average target price of $146.36.
• The company’s latest earnings beat expectations, reporting $0.44 EPS on $257.9 million in revenue, while also issuing Q2 2026 and FY 2026 guidance; meanwhile, insiders have recently sold shares.

DigitalOcean Holdings, Inc. (NYSE:DOCN - Get Free Report)'s share price was down 7% on Wednesday . The company traded as low as $138.15 and last traded at $146.0840. Approximately 1,193,785 shares changed hands during trading, a decline of 69% from the average daily volume of 3,897,549 shares. The stock had previously closed at $157.03.

Wall Street Analysts Forecast Growth

DOCN has been the topic of several recent analyst reports. Citigroup raised their price target on DigitalOcean from $115.00 to $180.00 and gave the company a "buy" rating in a report on Thursday, May 7th. Bank of America upped their price objective on shares of DigitalOcean from $103.00 to $107.00 and gave the company a "buy" rating in a research note on Thursday, April 9th. UBS Group increased their target price on shares of DigitalOcean to $175.00 and gave the company a "neutral" rating in a report on Tuesday, May 12th. Canaccord Genuity Group reissued a "buy" rating and issued a $200.00 price target on shares of DigitalOcean in a research note on Thursday, June 11th. Finally, Morgan Stanley upped their price target on shares of DigitalOcean from $75.00 to $175.00 and gave the company an "overweight" rating in a research report on Wednesday, May 6th. One research analyst has rated the stock with a Strong Buy rating, nine have assigned a Buy rating and three have assigned a Hold rating to the stock. According to data from MarketBeat, DigitalOcean presently has a consensus rating of "Moderate Buy" and an average target price of $146.36.

DigitalOcean Price Performance

The company has a quick ratio of 1.46, a current ratio of 1.46 and a debt-to-equity ratio of 0.92. The firm's fifty day moving average price is $149.90 and its 200-day moving average price is $93.84. The stock has a market cap of $14.83 billion, a P/E ratio of 62.29 and a beta of 1.60.

DigitalOcean (NYSE:DOCN - Get Free Report) last released its quarterly earnings data on Tuesday, May 5th. The company reported $0.44 earnings per share (EPS) for the quarter, beating analysts' consensus estimates of $0.27 by $0.17. The firm had revenue of $257.90 million for the quarter, compared to analysts' expectations of $249.76 million. DigitalOcean had a net margin of 24.97% and a return on equity of 88.86%. The company's revenue for the quarter was up 22.4% compared to the same quarter last year. During the same quarter in the previous year, the company earned $0.56 earnings per share. DigitalOcean has set its Q2 2026 guidance at 0.200-0.230 EPS and its FY 2026 guidance at 1.100-1.200 EPS. Analysts forecast that DigitalOcean Holdings, Inc. will post 0.54 earnings per share for the current year.

Insider Activity at DigitalOcean

In other news, Director Hilary Schneider sold 4,338 shares of the business's stock in a transaction that occurred on Friday, May 15th. The stock was sold at an average price of $156.38, for a total transaction of $678,376.44. Following the transaction, the director directly owned 24,323 shares of the company's stock, valued at approximately $3,803,630.74. The trade was a 15.14% decrease in their ownership of the stock. The transaction was disclosed in a filing with the Securities & Exchange Commission, which is accessible through this hyperlink. Also, CFO Matt Steinfort sold 10,000 shares of the company's stock in a transaction that occurred on Tuesday, June 2nd. The shares were sold at an average price of $170.07, for a total value of $1,700,700.00. Following the transaction, the chief financial officer owned 538,414 shares of the company's stock, valued at approximately $91,568,068.98. This represents a 1.82% decrease in their position. The SEC filing for this sale provides additional information. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. The sale was made to cover tax withholding obligations related to the vesting of equity awards. In the last quarter, insiders sold 39,338 shares of company stock valued at $6,191,576. Company insiders own 0.96% of the company's stock.

Institutional Inflows and Outflows

Several institutional investors have recently added to or reduced their stakes in DOCN. Principal Financial Group Inc. lifted its position in shares of DigitalOcean by 155.3% in the 1st quarter. Principal Financial Group Inc. now owns 1,108,420 shares of the company's stock worth $95,080,000 after purchasing an additional 674,231 shares during the period. Alyeska Investment Group L.P. bought a new position in DigitalOcean in the third quarter worth about $21,808,000. Arrowstreet Capital Limited Partnership lifted its holdings in DigitalOcean by 90.9% in the fourth quarter. Arrowstreet Capital Limited Partnership now owns 1,194,845 shares of the company's stock worth $57,496,000 after buying an additional 568,823 shares during the period. Franklin Resources Inc. boosted its position in DigitalOcean by 784.2% during the 4th quarter. Franklin Resources Inc. now owns 494,314 shares of the company's stock valued at $23,786,000 after acquiring an additional 438,411 shares in the last quarter. Finally, Danske Bank A S bought a new stake in DigitalOcean during the 3rd quarter valued at approximately $14,582,000. 49.77% of the stock is currently owned by institutional investors.

About DigitalOcean

DigitalOcean Holdings, Inc is a cloud infrastructure provider that focuses on simplicity, performance and developer experience. The company offers a range of cloud services designed to help software developers, startups and small- to medium-sized businesses deploy, manage and scale applications. Its flagship offering, Droplets, provides virtual private servers that can be configured with various CPU, memory and storage options. In addition to compute instances, DigitalOcean's platform includes managed Kubernetes, scalable object and block storage, managed databases, load balancers and networking capabilities such as Virtual Private Cloud (VPC) and Floating IPs.

Founded in 2011 and headquartered in New York City, DigitalOcean was created with the goal of making cloud computing more accessible to individual developers and smaller teams.

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