DigitalOcean Holdings, Inc. (NASDAQ:DOCN) has been making waves in the cloud computing sector, providing on-demand infrastructure and platform tools for developers and small to medium-sized businesses across multiple continents. However, recent reports indicate that some big players are divesting in the company. Sterling Investment Advisors Ltd., a major institutional investor, has reduced its holdings in DigitalOcean by 13.1% during the 4th quarter of 2020 according to their most recent filing with the Securities and Exchange Commission (SEC). The report confirms they sold off 8,600 shares of company stock which equates to approximately $1,451,000 worth on the market. While this decrease might not seem monumental when considering their overall ownership percentage at around 0.06%, it raises questions regarding the outlook or potential growth forecasts that Sterling may have had for DigitalOcean.
Even more intriguing is news surrounding General Counsel Alan Shapiro’s moves within the company as he recently sold off over $1 million worth of stock on February 21st alone. This comes in addition to COO Jeffrey Scott Guy selling nearly $522,000 worth of stock only days before on February 16th. Yet despite these insider sales, DigitalOcean’s stock price remains relatively stable with no apparent decrease following either sale.
Looking further into the future of DigitalOcean through current considerations begs one key question – where is this Silicon Valley unicorn headed? In recent years IPOs have become commonplace among rapidly-growing technology companies as they seek out funding while transitioning from private startups into publicly traded companies. However, CEO Yancey Spruill was quoted last year stating that DigitalOcean isn’t actively seeking an IPO suggesting that they may continue striving towards expansion within their current model without seeking external funding measures.
As investors continue to take notice of such maneuvers both large and small by insiders also not ignoring Sterling’s recent filings; it will be interesting to see how these actions affect the company’s mid-to-long term growth forecasts. While it is unlikely that the company will be noticeably affected by these insider trades or slight shifts in institutional holdings, investors and industry players alike might want to keep DigitalOcean on their list of companies to watch closely in the coming months.
DigitalOcean Holdings Inc.: Mixed Reviews From Analysts, But Strong Signs of Growth Potential
DigitalOcean Holdings, Inc. is a cloud computing platform that offers on-demand infrastructure and platform tools for developers, start-ups, and small to medium-sized businesses. Recently, several institutional investors and hedge funds have bought and sold shares of DOCN. Advisors Asset Management Inc., Signaturefd LLC, Nisa Investment Advisors LLC, Macquarie Group Ltd., and Geneos Wealth Management Inc. are among the institutions that have shown interest in DigitalOcean. According to data from Bloomberg.com, DigitalOcean has a consensus rating of “Hold” and a consensus price target of $40.54.
Despite some analysts issuing reports on DOCN shares — Credit Suisse Group upped their target price to $34.00 and gave the stock a “neutral” rating while Barclays increased the target price to $42.00 — two investment analysts have rated the stock with a sell rating, five have assigned a hold rating and five have assigned it as buy. The company’s market cap is $2.71 billion with a PEG ratio of 1.45.
DigitalOcean Holdings Inc.’s fifty-day moving average is $34.73, while its two-hundred-day moving average is $31.52 with an EPS of 0.28 released in their quarterly report in February 2021 . The company had revenue of $163 million during the same period up by 36% compared to last year’s Q1 revenue with analysts targeting an EPS of 0.53 at year-end.
In conclusion, despite mixed reviews from research analysts about DigitalOcean’s shares such as Credit Suisse Group giving it a “neutral” rating while Canaccord Genuity giving it a ‘buy’ rating with an increased price target; still there are some clear indicators pointing towards confidence in its growth potential such as strong revenue growth during times of economic distress combined with an increase in investment from key players within the industry showcasing that DigitalOcean can achieve long-term, sustained success.
