DigitalOcean (NYSE:DOCN) Shares Down 5.5% - Should You Sell?

Key Points

• DigitalOcean shares fell 5.5% to about $123.83 in Friday trading, with volume 69% below the average session level.
• Analysts remain broadly positive, with a consensus “Moderate Buy” rating and an average price target of $152.81, although UBS downgraded the stock to “neutral” and cut its target to $140.
• The company exceeded quarterly earnings expectations, reporting $0.45 EPS and $281.18 million in revenue, up 28.6% year over year; insiders have sold $2.59 million of stock over the past 90 days, primarily under pre-arranged plans.

DigitalOcean Holdings, Inc. (NYSE:DOCN - Get Free Report) dropped 5.5% during mid-day trading on Friday . The stock traded as low as $125.19 and last traded at $123.8250. 1,118,736 shares traded hands during trading, a decline of 69% from the average session volume of 3,648,876 shares. The stock had previously closed at $131.05.

Analyst Upgrades and Downgrades

Several research analysts have recently commented on the company. KeyCorp started coverage on DigitalOcean in a research report on Tuesday, June 2nd. They issued an "overweight" rating and a $200.00 price target for the company. Citigroup lifted their target price on DigitalOcean from $185.00 to $190.00 and gave the company a "buy" rating in a research note on Wednesday, August 5th. Truist Financial initiated coverage on shares of DigitalOcean in a report on Thursday, August 27th. They issued a "buy" rating and a $175.00 target price for the company. Robert W. Baird began coverage on shares of DigitalOcean in a research report on Tuesday, July 21st. They set an "outperform" rating and a $165.00 price target for the company. Finally, UBS Group lowered their price target on shares of DigitalOcean from $155.00 to $140.00 and set a "neutral" rating on the stock in a report on Wednesday, August 5th. Two investment analysts have rated the stock with a Strong Buy rating, twelve have given a Buy rating and three have issued a Hold rating to the company. According to MarketBeat.com, the company presently has a consensus rating of "Moderate Buy" and a consensus price target of $152.81.

DigitalOcean Trading Down 6.3%

The company has a 50 day moving average of $122.95 and a two-hundred day moving average of $118.97. The stock has a market capitalization of $12.82 billion, a PE ratio of 55.74, a P/E/G ratio of 113.57 and a beta of 1.57. The company has a debt-to-equity ratio of 1.14, a quick ratio of 1.31 and a current ratio of 1.31.

DigitalOcean (NYSE:DOCN - Get Free Report) last posted its quarterly earnings results on Tuesday, August 4th. The company reported $0.45 earnings per share (EPS) for the quarter, topping analysts' consensus estimates of $0.26 by $0.19. The business had revenue of $281.18 million during the quarter, compared to analysts' expectations of $279.03 million. DigitalOcean had a net margin of 23.26% and a return on equity of 31.01%. The business's quarterly revenue was up 28.6% on a year-over-year basis. During the same quarter last year, the company posted $0.39 earnings per share. DigitalOcean has set its FY 2026 guidance at 1.350-1.400 EPS and its Q3 2026 guidance at 0.280-0.300 EPS. Sell-side analysts predict that DigitalOcean Holdings, Inc. will post 0.63 EPS for the current year.

Insiders Place Their Bets

In other news, CFO Matt Steinfort sold 10,000 shares of the firm's stock in a transaction dated 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 directly owned 503,692 shares in the company, valued at $53,255,355.16. This trade represents a 1.95% decrease in their ownership of the stock. The sale was disclosed in a document filed with the SEC, which is available 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 Warren J. Adelman sold 4,200 shares of DigitalOcean stock in a transaction dated Friday, August 7th. The stock was sold at an average price of $124.01, for a total value of $520,842.00. Following the sale, the director directly owned 67,433 shares of the company's stock, valued at $8,362,366.33. This trade represents a 5.86% decrease in their position. Additional details regarding this sale are available in the official SEC disclosure. In the last 90 days, insiders sold 22,641 shares of company stock valued at $2,589,317. 0.96% of the stock is owned by company insiders.

Hedge Funds Weigh In On DigitalOcean

Several hedge funds and other institutional investors have recently bought and sold shares of the business. EverSource Wealth Advisors LLC grew its stake in DigitalOcean by 14.8% during the 1st quarter. EverSource Wealth Advisors LLC now owns 551 shares of the company's stock worth $47,000 after purchasing an additional 71 shares in the last quarter. Parallel Advisors LLC raised its position in DigitalOcean by 66.2% in the 1st quarter. Parallel Advisors LLC now owns 324 shares of the company's stock valued at $28,000 after purchasing an additional 129 shares in the last quarter. Maryland State Retirement & Pension System boosted its stake in shares of DigitalOcean by 1.9% in the 4th quarter. Maryland State Retirement & Pension System now owns 10,001 shares of the company's stock valued at $481,000 after buying an additional 185 shares during the period. Hilltop National Bank acquired a new position in shares of DigitalOcean during the second quarter worth about $38,000. Finally, Allworth Financial LP grew its position in shares of DigitalOcean by 54.4% during the third quarter. Allworth Financial LP now owns 724 shares of the company's stock worth $25,000 after buying an additional 255 shares in the last quarter. Institutional investors and hedge funds own 49.77% of the company's stock.

DigitalOcean Company Profile

DigitalOcean Holdings, Inc provides cloud computing services designed primarily for developers, startups, and small and medium-sized businesses. Its platform offers on-demand infrastructure and developer tools intended to simplify the process of building, deploying, and scaling applications.

The company's products include virtual machines known as Droplets, managed Kubernetes, managed databases, object storage through Spaces, block storage, networking services, and App Platform, a platform-as-a-service offering for application deployment.

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