DigitalOcean (NYSE:DOCN) Shares Gap Up - Here's Why

Key Points

• DigitalOcean shares gapped up before Tuesday’s open, opening at $145 after closing at $131.37 the prior day and trading as high as $139.57 early in the session.
• Analysts have turned more bullish on the stock, with several firms sharply raising price targets; the consensus rating is now “Moderate Buy” with an average target of $146.36.
• Recent earnings were strong, as DigitalOcean reported $0.44 EPS versus $0.27 expected and revenue of $257.9 million, up 22.4% year over year; the company also issued Q2 and FY 2026 guidance.

DigitalOcean Holdings, Inc. (NYSE:DOCN - Get Free Report)'s share price gapped up prior to trading on Tuesday . The stock had previously closed at $131.37, but opened at $145.00. DigitalOcean shares last traded at $139.5680, with a volume of 981,599 shares traded.

Analysts Set New Price Targets

DOCN has been the topic of a number of research reports. Bank of America increased their target price on shares of DigitalOcean from $103.00 to $107.00 and gave the stock a "buy" rating in a report on Thursday, April 9th. Citigroup lifted their price target on shares of DigitalOcean from $115.00 to $180.00 and gave the company a "buy" rating in a report on Thursday, May 7th. The Goldman Sachs Group boosted their price objective on shares of DigitalOcean from $78.00 to $179.00 and gave the company a "buy" rating in a research report on Wednesday, May 6th. KeyCorp started coverage on shares of DigitalOcean in a research note on Tuesday, June 2nd. They set an "overweight" rating and a $200.00 price objective on the stock. Finally, Piper Sandler lifted their target price on DigitalOcean from $98.00 to $155.00 and gave the company a "neutral" rating in a research note on Tuesday, May 5th. One 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 company. According to data from MarketBeat, DigitalOcean has a consensus rating of "Moderate Buy" and an average price target of $146.36.

DigitalOcean Price Performance

The company has a debt-to-equity ratio of 0.92, a quick ratio of 1.46 and a current ratio of 1.46. The stock has a market capitalization of $14.60 billion, a price-to-earnings ratio of 61.11 and a beta of 1.57. The business's 50 day simple moving average is $153.09 and its 200-day simple moving average is $96.29.

DigitalOcean (NYSE:DOCN - Get Free Report) last released its quarterly earnings results on Tuesday, May 5th. The company reported $0.44 earnings per share for the quarter, beating analysts' consensus estimates of $0.27 by $0.17. The company had revenue of $257.90 million for the quarter, compared to analysts' expectations of $249.76 million. DigitalOcean had a return on equity of 88.86% and a net margin of 24.97%.The business'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 posted $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. Research analysts anticipate that DigitalOcean Holdings, Inc. will post 0.54 earnings per share for the current year.

Insider Buying and Selling at DigitalOcean

In other news, CFO Matt Steinfort sold 10,000 shares of the firm's stock in a transaction on Tuesday, June 2nd. The stock was sold at an average price of $170.07, for a total transaction of $1,700,700.00. Following the transaction, the chief financial officer directly owned 538,414 shares of the company's stock, valued at approximately $91,568,068.98. This trade represents a 1.82% decrease in their ownership of the stock. The sale was disclosed in a document filed with the Securities & Exchange Commission, which is accessible through the SEC website. 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. Also, Director Hilary Schneider sold 4,338 shares of DigitalOcean stock in a transaction dated Friday, May 15th. The shares were sold at an average price of $156.38, for a total transaction of $678,376.44. Following the sale, the director owned 24,323 shares in the company, valued at approximately $3,803,630.74. This represents a 15.14% decrease in their ownership of the stock. The SEC filing for this sale provides additional information. Insiders have sold a total of 39,338 shares of company stock worth $6,191,576 in the last ninety days. 0.96% of the stock is owned by company insiders.

Hedge Funds Weigh In On DigitalOcean

A number of institutional investors and hedge funds have recently bought and sold shares of DOCN. Hilltop National Bank acquired a new stake in shares of DigitalOcean in the 2nd quarter worth approximately $38,000. Parallel Advisors LLC increased its stake in shares of DigitalOcean by 66.2% during the first quarter. Parallel Advisors LLC now owns 324 shares of the company's stock valued at $28,000 after acquiring an additional 129 shares during the period. Banque Cantonale Vaudoise bought a new stake in DigitalOcean during the first quarter worth approximately $33,000. Optiver Holding B.V. raised its holdings in DigitalOcean by 1,063.9% during the first quarter. Optiver Holding B.V. now owns 419 shares of the company's stock worth $36,000 after purchasing an additional 383 shares in the last quarter. Finally, EverSource Wealth Advisors LLC lifted its position in DigitalOcean by 14.8% in the first quarter. EverSource Wealth Advisors LLC now owns 551 shares of the company's stock worth $47,000 after purchasing an additional 71 shares during the period. Institutional investors own 49.77% of the company's stock.

DigitalOcean Company Profile

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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