HomeBusinessWhy DigitalOcean stocks up to 24% in May

Why DigitalOcean stocks up to 24% in May

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Why DigitalOcean stocks up to 24% in May
Why DigitalOcean stocks up to 24% in May

So what Will Happen?

Unlike the large public cloud providers, DigitalOcean focuses on serving small and medium-sized businesses. On May 4, the company reported first-quarter revenue of $127.3 million. This revenue beat its previous forecast of between $126 million to $126.5 million. Management did not raise its full-year revenue guidance range from $564 million to $568 million. And not raising the forecast for the year not been received by investors.

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Many analysts lowered their price targets on DigitalOcean stock following the first quarter report, with some citing this profitability issue. However, the analyst community began to reconsider after a little time had passed. On May 12, Goldman Sachs analyst Gabriela Borges began coverage of DigitalOcean shares, giving it a buy rating implying a 59% upside, according to The Fly.

Borges’ vote of confidence probably went a long way in helping DigitalOcean shares recover from their lows. But DigitalOcean’s management also contributed to the rally. It had already authorized a $300 million share buyback program in February and had already used half of it to buy back shares. However, on May 24, he announced that he was authorizing another $300 million on top of the approximately $150 million he had left in the previous program.

In other words, DigitalOcean shares are still down more than 60% from their all-time high. And it appears that management believes it is undervalued and is aggressively buying shares.

Now what

Things are going well for DigitalOcean at the moment. In the first quarter, its total number of clients grew 6% year over year to 623,000. And existing customers spend more over time, as measured by their 117% net dollar retention rate. But on June 9, investors will get a front row seat to management’s views on how well positioned the company is for the future. hat’s when an investor day presentation is scheduled.

Expect the presentation to be upbeat; after all, DigitalOcean’s management wants investors to have a positive outlook. So take things with a grain of salt. However, these presentations can be a great way for shareholders to understand the company’s long-term vision. And having expectations based on the long term is always a good thing, in my opinion.

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