DigitalOcean (NYSE:DOCN) Stock Falls 9.4% - Should You Sell?

Key Points

• DigitalOcean shares fell 9.4% to approximately $90.55, on trading volume that was 93% below the average session volume.
• Analyst sentiment remains broadly positive, with a consensus “Buy” rating and an average price target of $150.69, although UBS lowered its target to $105 and Weiss Ratings downgraded the stock to “Hold.”
• The company reported stronger-than-expected quarterly results, including $0.45 in earnings per share and $281.18 million in revenue, up 28.6% year over year; insiders have nevertheless sold shares through pre-arranged plans primarily to cover tax obligations.

DigitalOcean Holdings, Inc. (NYSE:DOCN - Get Free Report) fell 9.4% on Friday. The company traded as low as $89.02 and last traded at $90.5450. Approximately 250,551 shares changed hands during mid-day trading, a decline of 93% from the average session volume of 3,479,230 shares. The stock had previously closed at $99.97.

Analysts Set New Price Targets

DOCN has been the subject of a number of research analyst reports. Weiss Ratings lowered shares of DigitalOcean from a "buy (b-)" rating to a "hold (c+)" rating in a research note on Wednesday, September 9th. Robert W. Baird began coverage on DigitalOcean in a research note on Tuesday, July 21st. They issued an "outperform" rating and a $165.00 price objective on the stock. UBS Group decreased their price target on DigitalOcean from $125.00 to $105.00 and set a "neutral" rating on the stock in a research note on Monday. Truist Financial initiated coverage on DigitalOcean in a report on Thursday, August 27th. They set a "buy" rating and a $175.00 target price on the stock. Finally, Piper Sandler upgraded DigitalOcean from a "neutral" rating to an "overweight" rating and lowered their price objective for the stock from $142.00 to $126.00 in a research report on Wednesday, October 21st. Two analysts have rated the stock with a Strong Buy rating, fourteen have given a Buy rating and two have issued a Hold rating to the company. Based on data from MarketBeat.com, the company presently has a consensus rating of "Buy" and an average price target of $150.69.

DigitalOcean Price Performance

The stock has a market cap of $9.12 billion, a P/E ratio of 39.91, a price-to-earnings-growth ratio of 91.60 and a beta of 1.70. The company has a current ratio of 1.31, a quick ratio of 1.31 and a debt-to-equity ratio of 1.14. The business has a 50-day simple moving average of $120.27 and a 200 day simple moving average of $110.79.

DigitalOcean (NYSE:DOCN - Get Free Report) last posted its earnings results on Tuesday, August 4th. The company reported $0.45 earnings per share for the quarter, topping the consensus estimate of $0.26 by $0.19. DigitalOcean had a net margin of 23.26% and a return on equity of 31.01%. The firm had revenue of $281.18 million during the quarter, compared to the consensus estimate of $279.03 million. During the same quarter last year, the company earned $0.39 earnings per share. The company's revenue was up 28.6% on a year-over-year basis. DigitalOcean has set its FY 2026 guidance at 1.350-1.400 EPS and its Q3 2026 guidance at 0.280-0.300 EPS. On average, analysts forecast that DigitalOcean Holdings, Inc. will post 0.62 earnings per share for the current year.

Insider Activity

In other DigitalOcean news, 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 value of $421,334.05. Following the completion of the sale, the chief accounting officer owned 58,399 shares in the company, valued at $6,174,526.27. This represents a 6.39% decrease in their ownership of the stock. The sale was disclosed in a filing with the SEC, which is available through 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, CFO Matt Steinfort sold 10,000 shares of the stock in a transaction that occurred on Thursday, September 3rd. The shares were sold at an average price of $105.73, for a total transaction of $1,057,300.00. Following the sale, the chief financial officer directly owned 503,692 shares of the company's stock, valued at approximately $53,255,355.16. This trade represents a 1.95% decrease in their ownership of the stock. Additional details regarding this sale are available in the official SEC disclosure. 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 90 days, insiders have sold 22,641 shares of company stock worth $2,589,317. Corporate insiders own 0.96% of the company's stock.

Institutional Investors Weigh In On DigitalOcean

Several large investors have recently added to or reduced their stakes in DOCN. EverSource Wealth Advisors LLC grew its holdings in shares of DigitalOcean by 14.8% during the first quarter. EverSource Wealth Advisors LLC now owns 551 shares of the company's stock valued at $47,000 after buying an additional 71 shares during the last quarter. Sigma Planning Corp raised its stake in shares of DigitalOcean by 7.7% during the 3rd quarter. Sigma Planning Corp now owns 1,586 shares of the company's stock worth $212,000 after buying an additional 114 shares during the period. Parallel Advisors LLC lifted its holdings in 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 purchasing an additional 129 shares in the last quarter. Signaturefd LLC boosted its stake in DigitalOcean by 16.9% during the third quarter. Signaturefd LLC now owns 918 shares of the company's stock worth $122,000 after buying an additional 133 shares during the last quarter. Finally, Focus Financial Network Inc. raised its position in DigitalOcean by 10.0% in the third quarter. Focus Financial Network Inc. now owns 1,589 shares of the company's stock valued at $212,000 after purchasing an additional 145 shares during the period. 49.77% of the stock is owned by institutional investors.

DigitalOcean Company Profile

DigitalOcean Holdings, Inc is a cloud computing company that provides infrastructure and developer-focused services for startups, small and medium-sized businesses, and individual developers. Its platform is designed to simplify the deployment, management, and scaling of applications without requiring customers to build and operate extensive in-house infrastructure.

The company's offerings include Droplets, its virtual machine service; managed Kubernetes; managed databases; object and block storage; networking tools; and application deployment services through App Platform.

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