Taking the lead: DigitalOcean Holdings Inc. (DOCN)

DigitalOcean Holdings Inc. (NYSE: DOCN) stock fell -1.29% on Tuesday to $28.39 against a previous-day closing price of $28.76. With 0.52 million shares changed hands, the volume of the stock remained lighter than its average volume of 1.34 million shares. During the session, the Software – Infrastructure company that operates in wider Technology sector, reached to the highest price of $29.26 whereas the lowest price it dropped to was $28.07. The 52-week range on DOCN shows that it touched its highest point at $66.28 and its lowest point at $23.38 during that stretch. It currently has a 1-year price target of $36.17.

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Price Performance and Earnings:

Stock performance is one of the indicators that investors use to determine whether they will profit from a stock. The price performance of DOCN was up-trending over the past week, with a rise of 2.20%, but this was up by 9.44% over a month. Three-month performance dropped to -22.18% while six-month performance fell -27.02%. The stock lost -46.01% in the past year, while it has gained 11.46% so far this year. A look at the trailing 12-month EPS for DOCN yields -0.25 with Next year EPS estimates of 1.16. For the next quarter, that number is 0.20. This implies an EPS growth rate of 57.40% for this year and 41.59% for next year.

Float and Shares Shorts:

At present, 96.56 million DOCN shares are outstanding with a float of 68.46 million shares on hand for trading. On Oct 13, 2022, short shares totaled 9.81 million, which was 10.12% higher than short shares on Sep 14, 2022. In addition to Mr. Yancey L. Spruill as the firm’s CEO & Director, Mr. Alan Shapiro serves as its Gen. Counsel & Sec.

Institutional Ownership:

Through their ownership of 53.36% of DOCN’s outstanding shares, institutional investors have majority control over the company. Other institutions hold 28.12% of DOCN, in contrast to 18.68% held by mutual funds. Shares owned by individuals account for 15.68%. As the largest shareholder in DOCN with 5.01% of the stake, The Vanguard Group, Inc. holds 4,829,637 shares worth 4,829,637. A second-largest stockholder of DOCN, BlackRock Fund Advisors, holds 3,762,670 shares, controlling over 3.91% of the firm’s shares. AllianceBernstein LP is the third largest shareholder in DOCN, holding 3,172,288 shares or 3.29% stake. With a 2.31% stake in DOCN, the First Trust Cloud Computing ETF is the largest stakeholder. A total of 2,227,190 shares are owned by the mutual fund manager. The Vanguard Total Stock Market Index, which owns about 1.99% of DOCN stock, is the second-largest Mutual Fund holder. It holds 1,917,500 shares valued at 48.84 million. Vanguard Small Cap Index Fund holds 1.68% of the stake in DOCN, owning 1,613,094 shares worth 41.09 million.

Analysts Ratings:

Reading analyst opinions is an effective way to decide where to invest, and there are several opinions available for DOCN since 14 analysts follow the stock currently. There are 6 analysts who recommend BUY ratings, while 2 suggest SELL ratings. Of the remaining analysts, 5 believe that the stock is worth HOLDING, 1 give it an OVERWEIGHT rating, and 0 thinks that it’s UNDERWEIGHT. In the same way, a target price assigned to a stock can also reveal much about its potential. With DOCN analysts setting a high price target of $63.00 and a low target of $27.00, the average target price over the next 12 months is $36.17. Based on these targets, DOCN could surge 121.91% to reach the target high and fall by -4.9% to reach the target low. Reaching the average price target will result in a growth of 27.4% from current levels.

EPS: Estimates vs Actual

It is also common to use earnings estimates to evaluate a firm’s growth potential and to determine trading strategy. DOCN will report FY 2022 earnings on 02/22/2024. Analysts have provided yearly estimates in a range of $0.85 being high and $0.79 being low. For DOCN, this leads to a yearly average estimate of $0.82. The earnings surprise of a firm occurs when the actual results change from the consensus earnings estimate. DigitalOcean Holdings Inc. surprised analysts by $0.15 when it reported $0.38 EPS against a consensus estimate of $0.23. The surprise factor in the prior quarter was $0.10. Based on analyst estimates, the high estimate for the next quarter is $0.25 and the low estimate is $0.17. The average estimate for the next quarter is thus $0.19.

Summary of Insider Activity:

Insiders traded DOCN stock several times over the past three months with 3 Buys and 11 Sells. In these transactions, 14,141 shares were bought while 57,327 shares were sold. The number of buy transactions has increased to 53 while that of sell transactions has risen to 48 over the past year. The total number of shares bought during that period was 815,770 while 8,158,958 shares were sold.

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