Down 60%, Is It Time to Buy DigitalOcean Stock?

Motley Fool2022-01-24

Cloud computing provider DigitalOcean (NYSE:DOCN) went public last March and quickly became a market darling. The stock rocketed higher in the second half of 2021, topping out around $133 per share. ...

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2022-01-24
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The stock rocketed higher in the second half of 2021, topping out around $133 per share. ...</p>\n\n<a href=\"https://www.fool.com/investing/2022/01/24/down-60-is-it-time-to-buy-digitalocean-stock/\">网页链接</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK4548","symbol_name":"巴美列捷福持仓","start_time":0,"source_url":"https://www.fool.com/investing/2022/01/24/down-60-is-it-time-to-buy-digitalocean-stock/","article_id":"2205009938","we_media_id":null,"thumbnails":[],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2205009938","pubTimestamp":1643036003,"sourceInfo":{"source_id":"fool_stock","name":"Motley Fool"},"weMediaInfo":null,"summary":"The cloud computing stock is a lot cheaper than it was a few months ago.","collect":0,"end_time":0,"defaultTopTitle":"fool.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4548":"巴美列捷福持仓","BK4514":"搜索引擎","GOOG":"谷歌","BK4554":"元宇宙及AR概念","BK4532":"文艺复兴科技持仓","BK4553":"喜马拉雅资本持仓","BK4534":"瑞士信贷持仓","BK4507":"流媒体概念","BK4533":"AQR资本管理(全球第二大对冲基金)","BK4566":"资本集团","BK4525":"远程办公概念","BK4535":"淡马锡持仓","BK4524":"宅经济概念","DOCN":"DigitalOcean Holdings, Inc.","BK4559":"巴菲特持仓","BK4527":"明星科技股","BK4077":"互动媒体与服务","BK4538":"云计算","BK4116":"互联网服务与基础架构","BK4550":"红杉资本持仓","GOOGL":"谷歌A","BK4503":"景林资产持仓","BK4551":"寇图资本持仓","BK4122":"互联网与直销零售","AMZN":"亚马逊","BK4561":"索罗斯持仓"},"translate_title":"下跌60%，是时候买DigitalOcean的股票了吗？","themeId":"","isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"DOCN":1,"GOOG":0.9,"AMZN":0.83,"GOOGL":0.62},"content_text":"Cloud computing provider DigitalOcean (NYSE:DOCN) went public last March and quickly became a market darling. The stock rocketed higher in the second half of 2021, topping out around $133 per share. That's nearly triple the IPO price of $47 per share.Enthusiasm for the disruptive cloud company has all but vanished over the past few months. The stock now trades just a few dollars higher than its IPO price following a brutal decline. Nothing about the company or its story has really changed, but investor sentiment has done a 180.With shares of DigitalOcean so beaten down, is now a good time to buy the stock? Let's look at the pros and cons of investing in the cloud computing provider.Why you should buy DigitalOceanIt may seem the cloud computing market has already been won by Amazon Web Services (AWS), Microsoft Azure, and Alphabet's Google Cloud. These cloud giants take in the majority of spending on cloud infrastructure services, offer an immense list of products and features, and are backed by trillion-dollar companies.But it's not that simple. The big cloud platforms do a great job serving enterprise customers, but they're not really tuned for small businesses or individual developers. Pricing is complex and sometimes opaque, getting started is not easy, and the sheer number of options can be overwhelming. If you need real support, you'll probably have to pay for it.DigitalOcean is in some ways the anti-AWS. The company's platform puts simplicity above all else, offering a short list of products, simple and transparent pricing, and a wealth of resources to help developers. Spinning up a virtual server or database is quick and easy, and the company doesn't try to lock in customers by charging excessive data transfer fees.This type of platform is exactly what many developers want, and it shows. DigitalOcean has around 600,000 customers, and those customers are happily ramping up spending on the platform. In its most recent quarter, average revenue per customer jumped 28% and the net dollar retention rate hit 116%. DigitalOcean has a decent amount of churn because its customers skew small, but those who stick around are happy with the platform, by all indications.DigitalOcean is targeting 30% annual revenue growth in the long run. That will require solid execution, but the potential is certainly there. The company expects to report revenue of around $428 million for 2021, a tiny fraction of the $115 billion market it expects to be growing into by 2024. DigitalOcean is clearly resonating with developers, and it can grow into a much larger company if it can maintain that momentum.Why you should avoid DigitalOceanThere are two big risks for DigitalOcean investors.First, there is a tremendous amount of competition. Not only is DigitalOcean going up against cloud giants with deep pockets, but there are also plenty of privately held cloud companies going after smaller customers. There's Linode, Vultr, and UpCloud, to name a few. DigitalOcean is far from the only game in town.There are also platforms that focus more strictly on application development and hosting. Netlify, Vercel, and even Cloudflare offer the ability to host websites and execute backend logic. For many developers, not needing to worry about cloud servers is a big selling point.Second, there's the matter of valuation. DigitalOcean stock has fallen sharply, but it's still not particularly cheap. Valued around $5.7 billion, DigitalOcean trades for roughly 13 times sales. The company isn't profitable, although it is producing some free cash flow.DigitalOcean is not a software company, so it certainly does not deserve the ultra-high valuations some software companies have been awarded. A double-digit price-to-sales ratio looks a bit optimistic.A mixed bagThere are a lot of companies gunning for the same customers that DigitalOcean is going after. In the portion of the cloud computing market not dominated by the cloud giants, competition is heating up. There's room to innovate on developer experience, and the opportunity is enormous.There will probably be multiple winners, and DigitalOcean can certainly be one of them if it can continue to win over developers. But investors need to weigh that against a lofty valuation and an ever-growing slate of competitors.","kind":null,"is_publish_news":null,"is_publish_highlight":null,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"symbols":[],"gpt_button":1},"commentList":[{"id":630794104,"gmtCreate":1643036999918,"gmtModify":1643037000381,"author":{"id":"3585125163446793","authorId":"3585125163446793","name":"RobinChanKH","avatar":"https://static.tigerbbs.com/bf0ba843eca17a8812677bc4f2a46162","vip":1,"crmLevel":8,"crmLevelSwitch":0},"htmlText":"Up","listText":"Up","text":"Up","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":1,"repostSize":0,"link":"https://laohu8.com/post/630794104","repostId":2205009938,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":7206107,"gmtCreate":1643039719637,"gmtModify":1643039719746,"authorId":3586927429503803,"author":{"id":3586927429503803,"authorId":3586927429503803,"name":"Joeljp","avatar":"https://static.tigerbbs.com/78fa803679a3f58ef7405a5c0f53e970","vip":1,"crmLevel":5,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":630794104,"type":1,"supId":0,"prevId":0,"content":"<u>Okay</u>","text":"<u>Okay</u>","html":"<u>Okay</u>"}],"langContent":"CN"},{"id":630793499,"gmtCreate":1643036279897,"gmtModify":1643036280313,"author":{"id":"3581548947231431","authorId":"3581548947231431","name":"KAHHUAT","avatar":"https://static.tigerbbs.com/0142df644dd666ed7544324b3fa02898","vip":1,"crmLevel":2,"crmLevelSwitch":0},"htmlText":"Latest","listText":"Latest","text":"Latest","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":1,"repostSize":0,"link":"https://laohu8.com/post/630793499","repostId":2205009938,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":7205802,"gmtCreate":1643036286261,"gmtModify":1643036286352,"authorId":3581548947231431,"author":{"id":3581548947231431,"authorId":3581548947231431,"name":"KAHHUAT","avatar":"https://static.tigerbbs.com/0142df644dd666ed7544324b3fa02898","vip":1,"crmLevel":2,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":630793499,"type":1,"supId":0,"prevId":0,"content":"<u>Latets</u>","text":"<u>Latets</u>","html":"<u>Latets</u>"}],"langContent":"CN"}],"isCommentEnd":false,"newsSizeData":{"likeSize":37,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":false,"deviceId":"web-server-community-laohu8-v3","version":"4.22.4","shortVersion":"4.22.4","platform":"web","vendor":"web","appName":"laohu8","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2205009938"}