Back in August, we commented on how DigitalOcean (NYSE: DOCN) stock took a plunge.
In November 2021, their stock traded for $125 per share. Last August it was at $43.
Now it’s struggling at $20. $10,000 invested in Digital Ocean in November 2021 would be worth $1,600 now.
What’s the trouble? JP Morgan cut their forecast from $34/share to $25/share after JPM updated their “model”. Barclays revised from $42 to $30 due to a “lack of catalysts“. Piper Sandler expect the stock to trade at $22/share over concerns about how DO’s management is “messaging low-teens growth for 2024.”
DigitalOcean is still losing money. If the firm reported rapid expansion, management could sell the story that they’re still in a growth phase and scaling up the business, with rich profits to come in the future after market share has been gained.
But DO has been around since 2011. At this point, how much more traction are they going to get? Is there any IT shop that hasn’t heard about DO? I think by now the potential customers who might consider signing up for DO have considered DO and already chosen or rejected the firm.
So now instead of being priced as a red-hot growth company, they’re being valued as a steady run-rate firm that’s losing money.
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But DO has been around since 2023. ( I think you mean 2011)
You caught my typo before it was fixed 😄