DigitalOcean Holdings, Inc.DOCN
NYSE • Technology
$159.57
P/E
61.61
PEG
—
FCF Yield
—
Rev Growth YoY
+22.4% YoY
Gross Margin
56.1%
Health Score
6/10
D/E Ratio
-25.46
Confidence
LOW
Business Snapshot
DigitalOcean provides cloud infrastructure services, including compute, storage, networking, and managed databases, targeting small-to-medium businesses and independent developers. The company competes in the highly fragmented cloud infrastructure market as a niche challenger to hyperscalers like AWS and Azure, differentiating with simplicity and predictable pricing. With trailing twelve-month revenue of $948.63M, DigitalOcean operates at a meaningful scale within the mid-tier cloud segment. A defining characteristic is its high gross margin of 56.1%, typical of platform-based software businesses, combined with a strong focus on operational efficiency to drive profitability.
Financial Health
Gross margin of 56.1% declined from 58.7% in the prior year, indicating some pressure on input costs or pricing, while net margin (TTM) stands at a healthy 25.0%. The balance sheet shows a negative debt/equity ratio of -25.46x, which signals that shareholders' equity is negative — a potential red flag for financial stability; the current ratio of 0.69x also points to liquidity risk, as current liabilities exceed current assets...
Risk Assessment
- VALUATION — P/E of 61.61x is 76% above the sector average of 35x, historically indicating elevated expectations that leave little room for error.
- EARNINGS QUALITY — Net income growth of -58.7% YoY was largely driven by a non-recurring spike in Q3 2025; normalized profitability is more volatile than surface metrics suggest.
- DEBT / LIQUIDITY — Current ratio of 0.69x is well below the 1.0x threshold, signaling potential near-term liquidity strain if revenue growth falters.
- 52-WEEK POSITION — Current price of $159.57 is only 3.2% below the 52-week high of $164.77, offering limited upside from a near-term technical perspective.
- TECHNICALS — RSI, MACD, and moving average data unavailable for this period; momentum cannot be independently confirmed.
- VALUATION DIVERGENCE — FMP DCF estimate of $46.20 implies overvaluation of 245%, while the Python DCF is not calculable; the single DCF figure carries high model sensitivity....