Up Nearly 50% This Year, Is It Too Late to Buy DigitalOcean Stock?
Shares of DigitalOcean (NYSE: DOCN), a cloud computing specialist for small and medium-sized businesses, have been rocketing higher in 2023. The stock is up 46% year to date, though it still has a long way to go to recapture its all-time highs from late 2021.
During its last quarterly update, DigitalOcean announced a restructuring plan that will reduce revenue growth this year, but should also help it achieve its targeted profitability metrics more quickly. The market has obviously been pleased and pricing in this new expectation for the small cloud infrastructure technologist. But after this year's sharp run-up, is DigitalOcean stock still a buy?
There will be a growing disconnect between DigitalOcean's GAAP net income and free cash flow this year. The company briefly jumped into GAAP profitable territory in 2022 (during the third quarter specifically, before reporting a GAAP net loss in the fourth). GAAP net income is the metric typically used to calculate the price-to-earnings ratio, which is not currently meaningful for DigitalOcean since it reported a net loss for full-year 2022.
Source Fool.com
