Here's Why DigitalOcean Stock Was Up 24% in May
Shares of cloud computing company DigitalOcean Holdings (NYSE: DOCN) were up 23.9% in May, according to data provided by S&P Global Market Intelligence. Early in the month the stock was down nearly 20% and it was during this time it reported financial results for the first quarter of 2022. Later in the month as the stock was recovering, management announced a share buyback program that may have further boosted investor confidence.
Unlike the large public cloud providers, DigitalOcean focuses on serving small and medium-sized businesses. On May 4, the company reported Q1 revenue of $127.3 million, which was more than its previous guidance of between $126 million and $126.5 million. However, management didn't raise its full-year revenue guidance range of $564 million to $568 million. And not raising the forecast for the year wasn't well received by investors.
Moreover, DigitalOcean's profit came up short of Wall Street's expectations. Consider that the company's gross profit margin made significant progress in Q1, jumping from 57.8% last year to 63.3% this year. And yet, its overall profitability declined because operating expenses soared 84% year over year, compared to just 36% year-over-year revenue growth.
Source Fool.com
