Shares of fresh IPO stock DigitalOcean Holdings (NYSE:DOCN) began trading today. This DigitalOcean IPO was initially priced at $47 per share, though DOCN stock has slipped as much as 17% in early trading as investors appear to be digesting what this company is truly worth.
Any company like DigitalOcean operating in the cloud space is likely to get a lot of attention in this market.
Let’s look at a few things DOCN investors might want to know.
Key Things to Know About the DigitalOcean IPO
- DigitalOcean raised $775 million from its IPO. Accordingly, the company expects to use these funds to grow its existing infrastructure footprint.
- Currently, DigitalOcean operates 14 data centers globally via leases.
- Shares opened lower, and have traded lower than the company’s initial offer price of $47 since the markets opened today.
- At the time of writing, the cloud infrastructure play has a market capitalization of around $4.5 billion.
- It appears some investors think this valuation is steep, considering the company’s financials.
- Indeed, the company reported a $43.6 million net loss on $318 million in revenue last year. Despite revenue growing by around 25%, its loss also grew by 7%.
- DigitalOcean earns most of its revenue from what it calls “droplets.” Essentially, these allow customers access to tranches of physical servers.
- Accordingly, DigitalOcean is pursuing strategic moves to expand its margin long term. The company hopes to generate higher recurring income while reducing R&D, and SG&A costs as a percentage of revenue.
- The company’s growth prospects appear to be strong. Investors are pricing in a price-sales multiple on this stock well in excess of Microsoft (NASDAQ:MSFT) currently.
- Accordingly, investors are betting DigitalOcean can capture market share from industry leaders Amazon (NASDAQ:AMZN) and Microsoft, major players in cloud computing.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article.