From Nasdaq:

DigitalOcean (NYSE: DOCN) offers simplicity in cloud computing for developers and small businesses, avoiding the complexity of larger platforms like Amazon Web Services. Despite lower average customer spending, DigitalOcean saw revenue rise in the fourth quarter, but net dollar retention dipped to 96%. The company generates significant free cash flow for future investments.

Expanding its platform, DigitalOcean acquired Cloudways and Paperspace, adding managed hosting services and an AI platform. SnapShooter acquisition enhances backup solutions across multiple cloud providers. The launch of Cloudways Autonomous simplifies managed WordPress hosting with automatic resource scaling, addressing customer pain points. CEO Paddy Srinivasan plans to enhance developer experience and invest in new products like AI.

With shares down from highs, DigitalOcean’s stock trades at a reasonable valuation of 24 times free cash flow. The company forecasts 10% revenue growth in 2024, with a long-term opportunity as spending on cloud services among small businesses is expected to increase significantly. Despite current challenges, new products and improved spending environment can drive growth beyond 2024.

Investing in DigitalOcean offers potential for long-term growth, with the company working on new products and acquiring complementary services to enhance its platform. Stock Advisor’s top stock picks don’t feature DigitalOcean, but the company’s strategic direction and growth initiatives could offer attractive returns. Investing in DigitalOcean now may present a promising opportunity for investors.



Read more at Nasdaq: Buy This Beaten-Down Cloud Stock Before Growth Picks Up