DigitalOcean (NYSE:DOCN) Shares Gap Up on Better-Than-Expected Earnings

DigitalOcean Holdings, Inc. (NYSE:DOCN) shares gapped up before the market opened on Wednesday following a stronger than expected earnings report. The stock had previously closed at $38.82, but opened at $45.32. DigitalOcean shares last traded at $45.4990, with a volume of 2,697,937 shares changing hands.

The company reported $0.54 earnings per share (EPS) for the quarter, topping the consensus estimate of $0.31 by $0.23. The firm had revenue of $229.63 million for the quarter, compared to analysts’ expectations of $226.55 million. DigitalOcean had a negative return on equity of 92.51% and a net margin of 29.15%.The business’s revenue was up 15.9% compared to the same quarter last year. During the same period in the previous year, the firm posted $0.52 earnings per share. DigitalOcean has set its Q4 2025 guidance at 0.350-0.400 EPS. FY 2025 guidance at 2.000-2.050 EPS.

Analyst Ratings Changes

A number of equities research analysts recently commented on the company. Canaccord Genuity Group lifted their target price on DigitalOcean from $55.00 to $60.00 and gave the stock a “buy” rating in a report on Thursday. Weiss Ratings reaffirmed a “hold (c)” rating on shares of DigitalOcean in a research note on Wednesday, October 8th. Bank of America raised DigitalOcean from an “underperform” rating to a “buy” rating and boosted their price objective for the stock from $34.00 to $60.00 in a research note on Thursday. Morgan Stanley upped their price objective on DigitalOcean from $41.00 to $44.00 and gave the company an “overweight” rating in a report on Wednesday, August 6th. Finally, Stifel Nicolaus set a $36.00 price target on shares of DigitalOcean in a research report on Tuesday, August 5th. Seven equities research analysts have rated the stock with a Buy rating and six have issued a Hold rating to the company’s stock. Based on data from MarketBeat, DigitalOcean has a consensus rating of “Moderate Buy” and a consensus price target of $47.73.

Insider Activity at DigitalOcean

In other news, insider Bratin Saha sold 13,010 shares of DigitalOcean stock in a transaction on Wednesday, September 3rd. The shares were sold at an average price of $31.87, for a total transaction of $414,628.70. Following the completion of the sale, the insider directly owned 269,465 shares of the company’s stock, valued at approximately $8,587,849.55. The trade was a 4.61% decrease in their position. The transaction was disclosed in a document filed with the Securities & Exchange Commission, which is accessible through the SEC website. Corporate insiders own 0.96% of the company’s stock.

Institutional Investors Weigh In On DigitalOcean

Several institutional investors have recently modified their holdings of DOCN. CX Institutional grew its position in shares of DigitalOcean by 780.5% in the second quarter. CX Institutional now owns 1,039 shares of the company’s stock valued at $30,000 after purchasing an additional 921 shares during the period. GAMMA Investing LLC boosted its stake in shares of DigitalOcean by 336.1% during the 1st quarter. GAMMA Investing LLC now owns 1,064 shares of the company’s stock valued at $36,000 after buying an additional 820 shares during the period. Wilmington Savings Fund Society FSB bought a new stake in shares of DigitalOcean during the 3rd quarter worth $37,000. SVB Wealth LLC bought a new position in DigitalOcean in the first quarter worth $48,000. Finally, Farther Finance Advisors LLC increased its stake in shares of DigitalOcean by 42.3% in the second quarter. Farther Finance Advisors LLC now owns 1,924 shares of the company’s stock valued at $55,000 after buying an additional 572 shares in the last quarter. Hedge funds and other institutional investors own 49.77% of the company’s stock.

DigitalOcean Stock Performance

The company has a market cap of $4.53 billion, a price-to-earnings ratio of 30.77, a PEG ratio of 2.68 and a beta of 1.78. The firm’s 50-day moving average price is $37.69 and its 200 day moving average price is $32.35.

DigitalOcean Company Profile

DigitalOcean Holdings, Inc, through its subsidiaries, operates a cloud computing platform in North America, Europe, Asia, and internationally. The company’s platform provides on-demand infrastructure and platform tools for developers, start-ups, and small and growing digital businesses. It also offers infrastructure-as-a-service (IaaS) solutions comprising compute and storage services, as well as networking projects, including Cloud Firewalls software, Managed Load Balancers software, and Virtual Private Cloud (VPC).