2024-06-25 21:00:17 ET
Summary
- DigitalOcean's revenue growth rates are modest, projected around a 13% CAGR, which may not justify its current valuation.
- The company carries significant debt, over $1 billion in net debt, potentially limiting its ability to return capital to shareholders.
- All in all, I'm neutral on DOCN's prospects.
Investment Thesis
DigitalOcean's ( DOCN ) is not an expensive stock. Accordingly, I believe that paying 17x this year's free cash flow is a fair multiple for what the business offers....
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DigitalOcean: Outlook Is Too Cloudy