DigitalOcean (NYSE:DOCN) Shares Gap Up on Strong Earnings

Key Points

• DigitalOcean's stock price gapped up significantly, opening at $30.71 compared to its previous close of $27.01, indicating strong market interest and trading activity.
• Analysts have mixed views on the stock, with ratings ranging from "buy" to "hold" and a consensus price target of $40.36, reflecting uncertainties amidst a changing market outlook.
• DigitalOcean reported earnings of $0.56 per share, beating estimates, with revenue growth of 14.1% year-over-year, showcasing its continued performance in the cloud computing sector.

DigitalOcean Holdings, Inc. (NYSE:DOCN - Get Free Report)'s stock price gapped up prior to trading on Tuesday after the company announced better than expected quarterly earnings. The stock had previously closed at $27.01, but opened at $30.71. DigitalOcean shares last traded at $32.95, with a volume of 797,932 shares traded.

The company reported $0.59 EPS for the quarter, beating the consensus estimate of $0.47 by $0.12. The company had revenue of $218.70 million for the quarter, compared to analyst estimates of $216.62 million. DigitalOcean had a negative return on equity of 73.19% and a net margin of 15.18%. DigitalOcean's quarterly revenue was up 13.6% compared to the same quarter last year. During the same period last year, the company earned $0.48 earnings per share.

Analyst Upgrades and Downgrades

Several research firms recently issued reports on DOCN. Canaccord Genuity Group raised their price objective on shares of DigitalOcean from $45.00 to $49.00 and gave the stock a "buy" rating in a research report on Wednesday. Citigroup reduced their price target on shares of DigitalOcean from $50.00 to $40.00 and set a "buy" rating on the stock in a research report on Wednesday, May 7th. UBS Group lowered their price objective on DigitalOcean from $44.00 to $32.00 and set a "neutral" rating for the company in a research report on Thursday, May 8th. The Goldman Sachs Group cut their target price on DigitalOcean from $46.00 to $41.00 and set a "buy" rating for the company in a research note on Wednesday, May 7th. Finally, Needham & Company LLC reaffirmed a "hold" rating on shares of DigitalOcean in a research note on Tuesday, May 6th. One analyst has rated the stock with a sell rating, five have issued a hold rating and seven have given a buy rating to the stock. Based on data from MarketBeat.com, the stock has a consensus rating of "Hold" and a consensus target price of $41.45.

Insider Activity at DigitalOcean

In related news, insider Bratin Saha sold 3,461 shares of the business's stock in a transaction on Wednesday, June 18th. The stock was sold at an average price of $27.77, for a total transaction of $96,111.97. Following the completion of the transaction, the insider directly owned 294,546 shares of the company's stock, valued at $8,179,542.42. The trade was a 1.16% decrease in their position. The transaction was disclosed in a document filed with the SEC, which is available through this hyperlink. Insiders own 0.96% of the company's stock.

Institutional Trading of DigitalOcean

A number of large investors have recently made changes to their positions in the company. Viking Fund Management LLC purchased a new position in DigitalOcean in the first quarter valued at approximately $2,170,000. Wesbanco Bank Inc. acquired a new position in DigitalOcean in the first quarter valued at $808,000. Concurrent Investment Advisors LLC purchased a new position in shares of DigitalOcean during the first quarter worth about $265,000. Sumitomo Mitsui Trust Group Inc. increased its position in shares of DigitalOcean by 119.6% during the first quarter. Sumitomo Mitsui Trust Group Inc. now owns 16,729 shares of the company's stock worth $559,000 after purchasing an additional 9,110 shares in the last quarter. Finally, Northern Trust Corp boosted its position in shares of DigitalOcean by 14.8% in the 4th quarter. Northern Trust Corp now owns 725,960 shares of the company's stock valued at $24,733,000 after purchasing an additional 93,347 shares during the period. 49.77% of the stock is currently owned by hedge funds and other institutional investors.

DigitalOcean Trading Down 5.0%

The stock has a market cap of $2.97 billion, a PE ratio of 25.09, a P/E/G ratio of 2.67 and a beta of 1.75. The business has a 50 day moving average of $28.87 and a 200-day moving average of $32.95.

About DigitalOcean

DigitalOcean Holdings, Inc, through its subsidiaries, operates a cloud computing platform in North America, Europe, Asia, and internationally. The company's platform provides on-demand infrastructure and platform tools for developers, start-ups, and small and growing digital businesses. It also offers infrastructure-as-a-service (IaaS) solutions comprising compute and storage services, as well as networking projects, including Cloud Firewalls software, Managed Load Balancers software, and Virtual Private Cloud (VPC).