DigitalOcean (NYSE:DOCN) Trading Down 7.2% - Should You Sell?

Key Points

• DigitalOcean shares fell 7.2% on Monday, trading as low as $159.72 after closing at $173.27, with volume well below average.
• Despite the pullback, Wall Street remains broadly constructive: several firms recently raised price targets, and the stock’s consensus rating is still “Moderate Buy” with an average target of $146.36.
• The company’s latest results were solid, with Q1 earnings and revenue both beating estimates and revenue rising 22.4% year over year, though insiders have also been selling shares recently.

DigitalOcean Holdings, Inc. (NYSE:DOCN - Get Free Report)'s share price fell 7.2% on Monday . The company traded as low as $159.72 and last traded at $160.7180. 894,834 shares were traded during mid-day trading, a decline of 77% from the average session volume of 3,829,418 shares. The stock had previously closed at $173.27.

Wall Street Analyst Weigh In

Several brokerages recently issued reports on DOCN. The Goldman Sachs Group upped their target price on DigitalOcean from $78.00 to $179.00 and gave the company a "buy" rating in a research report on Wednesday, May 6th. Oppenheimer set a $190.00 price objective on shares of DigitalOcean in a report on Wednesday, May 6th. Barclays increased their price objective on shares of DigitalOcean from $105.00 to $183.00 and gave the company an "overweight" rating in a research report on Wednesday, May 6th. Citigroup lifted their target price on shares of DigitalOcean from $115.00 to $180.00 and gave the stock a "buy" rating in a research note on Thursday, May 7th. Finally, Citizens Jmp boosted their target price on shares of DigitalOcean from $83.00 to $105.00 and gave the stock a "market outperform" rating in a research report on Thursday, March 26th. One equities research analyst has rated the stock with a Strong Buy rating, nine have given a Buy rating and three have assigned a Hold rating to the company. According to MarketBeat, the stock currently has an average rating of "Moderate Buy" and a consensus target price of $146.36.

DigitalOcean Stock Down 5.6%

The firm has a market capitalization of $17.07 billion, a price-to-earnings ratio of 71.55 and a beta of 1.59. The company has a debt-to-equity ratio of 0.92, a current ratio of 1.46 and a quick ratio of 1.46. The business has a fifty day moving average price of $140.01 and a two-hundred day moving average price of $88.72.

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

Insider Activity at DigitalOcean

In related news, CFO Matt Steinfort sold 10,000 shares of the firm's stock in a transaction on Tuesday, June 2nd. The shares were sold at an average price of $170.07, for a total transaction of $1,700,700.00. Following the completion of the transaction, the chief financial officer owned 538,414 shares of the company's stock, valued at $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 SEC, which is available at this hyperlink. 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 the firm's stock in a transaction 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. This trade represents a 15.14% decrease in their position. Additional details regarding this sale are available in the official SEC disclosure. Over the last 90 days, insiders have sold 39,338 shares of company stock valued at $6,191,576. Company insiders own 0.96% of the company's stock.

Institutional Investors Weigh In On DigitalOcean

Several hedge funds have recently added to or reduced their stakes in DOCN. Vanguard Group Inc. raised its stake in shares of DigitalOcean by 5.0% during the 3rd quarter. Vanguard Group Inc. now owns 9,362,889 shares of the company's stock valued at $319,836,000 after buying an additional 442,617 shares during the last quarter. Fuller & Thaler Asset Management Inc. boosted its stake in shares of DigitalOcean by 11.6% in the fourth quarter. Fuller & Thaler Asset Management Inc. now owns 2,420,341 shares of the company's stock worth $116,467,000 after buying an additional 252,303 shares during the last quarter. Lazard Asset Management LLC boosted its stake in shares of DigitalOcean by 34.5% in the second quarter. Lazard Asset Management LLC now owns 1,660,731 shares of the company's stock worth $47,430,000 after buying an additional 426,264 shares during the last quarter. Van Berkom & Associates Inc. grew its holdings in DigitalOcean by 2.9% during the fourth quarter. Van Berkom & Associates Inc. now owns 1,610,671 shares of the company's stock worth $77,505,000 after acquiring an additional 45,680 shares during the period. Finally, First Trust Advisors LP grew its holdings in DigitalOcean by 9.3% during the first quarter. First Trust Advisors LP now owns 1,441,151 shares of the company's stock worth $123,622,000 after acquiring an additional 122,675 shares during the period. 49.77% of the stock is owned by hedge funds and other 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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