DigitalOcean (NYSE:DOCN) Shares Climb 7.1% - Here's What Happened

Key Points

• DigitalOcean shares rose 7.1% to $83.83 in Tuesday trading, although mid-day volume was down 87% from its daily average.
• The company reported quarterly EPS of $0.45, beating estimates of $0.32, and revenue of $321.19 million versus expectations of $306.74 million; revenue increased 39.6% year over year.
• Analysts’ consensus rating was “Moderate Buy”, with an average price target of $141.06. Several firms recently cut their targets, while maintaining Buy or Overweight ratings.

DigitalOcean Holdings, Inc. (NYSE:DOCN - Get Free Report) shares were up 7.1% during trading on Tuesday. The stock traded as high as $82.90 and last traded at $83.8270. 461,316 shares traded hands during mid-day trading, a decline of 87% from the average daily volume of 3,571,922 shares. The stock had previously closed at $78.30.

Analyst Upgrades and Downgrades

Several equities analysts have recently issued reports on DOCN shares. Stifel Nicolaus set a $130.00 price target on DigitalOcean in a research report on Tuesday, November 3rd. William Blair reissued an "outperform" rating on shares of DigitalOcean in a research note on Wednesday, July 15th. Citigroup decreased their target price on DigitalOcean from $190.00 to $160.00 and set a "buy" rating on the stock in a report on Wednesday, November 4th. Barclays dropped their price target on DigitalOcean from $161.00 to $140.00 and set an "overweight" rating on the stock in a research note on Wednesday, November 4th. Finally, Canaccord Genuity Group dropped their price target on DigitalOcean from $200.00 to $180.00 and set a "buy" rating on the stock in a research report on Wednesday, November 4th. Two equities research analysts have rated the stock with a Strong Buy rating, fourteen have issued a Buy rating, one has issued a Hold rating and one has given a Sell rating to the company. According to data from MarketBeat.com, DigitalOcean presently has a consensus rating of "Moderate Buy" and an average target price of $141.06.

DigitalOcean Stock Up 2.0%

The firm's 50 day moving average price is $115.69 and its two-hundred day moving average price is $111.81. The company has a market capitalization of $9.43 billion, a P/E ratio of 258.57, a PEG ratio of 73.25 and a beta of 1.69. The company has a current ratio of 1.15, a quick ratio of 1.31 and a debt-to-equity ratio of 0.61.

DigitalOcean (NYSE:DOCN - Get Free Report) last announced its quarterly earnings data on Tuesday, November 3rd. The company reported $0.45 earnings per share (EPS) for the quarter, topping analysts' consensus estimates of $0.32 by $0.13. The company had revenue of $321.19 million for the quarter, compared to analysts' expectations of $306.74 million. DigitalOcean had a return on equity of 15.01% and a net margin of 3.11%. The business's revenue was up 39.6% compared to the same quarter last year. During the same quarter in the prior year, the business posted $0.54 EPS. Equities research analysts forecast that DigitalOcean Holdings, Inc. will post 0.65 EPS for the current year.

Insiders Place Their Bets

In other news, CFO Matt Steinfort sold 10,000 shares of the stock in a transaction that occurred on Thursday, September 3rd. The stock was sold at an average price of $105.73, for a total value of $1,057,300.00. Following the completion of the transaction, the chief financial officer owned 503,692 shares of the company's stock, valued at approximately $53,255,355.16. This represents a 1.95% decrease in their position. The sale was disclosed in a legal filing 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, CAO Cherie Barrett sold 3,985 shares of the company's stock in a transaction dated Thursday, September 3rd. The stock was sold at an average price of $105.73, for a total transaction of $421,334.05. Following the completion of the transaction, the chief accounting officer owned 58,399 shares in the company, valued at approximately $6,174,526.27. The trade was a 6.39% decrease in their position. The disclosure for this sale is available in the SEC filing. 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 three months, insiders sold 18,441 shares of company stock worth $2,068,475. Insiders own 0.96% of the company's stock.

Institutional Inflows and Outflows

Institutional investors and hedge funds have recently added to or reduced their stakes in the stock. Bank of America Corp DE bought a new position in DigitalOcean in the 2nd quarter worth about $241,945,000. Principal Financial Group Inc. raised its holdings in shares of DigitalOcean by 155.3% during the first quarter. Principal Financial Group Inc. now owns 1,108,420 shares of the company's stock valued at $95,080,000 after buying an additional 674,231 shares during the last quarter. Bank of New York Mellon Corp bought a new stake in shares of DigitalOcean during the second quarter valued at approximately $98,011,000. Allspring Global Investments Holdings LLC raised its holdings in shares of DigitalOcean by 81.3% during the first quarter. Allspring Global Investments Holdings LLC now owns 683,707 shares of the company's stock valued at $59,947,000 after buying an additional 306,529 shares during the last quarter. Finally, Sei Investments Co. boosted its position in shares of DigitalOcean by 82.8% during the first quarter. Sei Investments Co. now owns 370,223 shares of the company's stock worth $31,758,000 after buying an additional 167,659 shares during the period. Hedge funds and other institutional investors own 49.77% of the company's stock.

About DigitalOcean

DigitalOcean Holdings, Inc provides cloud computing services designed primarily for developers, startups, and small and midsize businesses. Founded in 2011, the company focuses on making it easier for customers to build, deploy, and scale applications without managing their own physical infrastructure.

Its platform includes virtual machines known as Droplets, managed Kubernetes, an application platform, managed databases, object storage, and networking and monitoring tools. These services support tasks ranging from hosting websites and applications to developing and running cloud-native software.

DigitalOcean serves customers around the world through its cloud platform and data center infrastructure.

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