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Why DigitalOcean Holdings Stock Jumped Today

By Chris Neiger – Aug 2, 2021 at 4:10PM

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Investors were reacting to a positive analyst note about the company.

What happened

Shares of DigitalOcean Holdings (NYSE: DOCN), a cloud computing platform company, spiked today after the company received a bullish report from Citron Research. 

The tech stock gained as much as 13.8% and was up by 12.8% as of 3:31 p.m. EDT.

So what 

Citron's report makes some comparisons between DigitalOcean and Shopify and Square, saying the cloud computing company has similar opportunities with small and medium-sized businesses (SMBs) that the other two companies have had.

Red and green line graphs on a black background.

Image source: Getty Images.

"We've seen this movie before and just like how Shopify and Square saw that SMBs were not far behind large enterprises in adopting e-commerce and digital payments, DigitalOcean is in the leading position to capitalize on this mega trend," the Citron report said. 

Citron has a $200 price target on DigitalOcean's stock, which represents an upside of more than three times the company's current share price.  

Now what 

While notes like these can sometimes help shed some light on a company, investors would be better served by taking a close look at DigitalOcean's upcoming second-quarter results, which the company will release on Aug. 5. 

DigitalOcean's management expects revenue to be between $97 million and $99 million. Considering DigitalOcean's share price jumped so quickly after just one investor note, it's possible the company's share price could move dramatically again, once the second-quarter earnings report is released. 

Chris Neiger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends DigitalOcean Holdings, Inc., Shopify, and Square. The Motley Fool recommends the following options: long January 2023 $1,140 calls on Shopify, and short January 2023 $1,160 calls on Shopify. The Motley Fool has a disclosure policy.

Stocks Mentioned

DigitalOcean Stock Quote
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