DigitalOcean Holdings (DOCN) Stock Forecast & Price Target

DigitalOcean Holdings Inc. has demonstrated significant growth in its Scaler+ cohort, which grew by 17% year-over-year to 504 customers and contributed 22% of total revenue, highlighting the company's successful engagement strategies and product launches. The company reported a net dollar retention rate of 99% for the fourth quarter, reflecting strong customer loyalty and the ability to retain and expand revenue from existing clients. Additionally, DigitalOcean's revenue guidance for the upcoming year is projected between $870 million and $890 million, representing a year-over-year increase of 13%, which aligns with market expectations and indicates a robust financial outlook.

DigitalOcean Holdings Inc. faces potential challenges as low-spend customer revenue has shown consecutive quarterly declines of 3% and 4%, signaling a troubling trend in customer retention and spending. The company's downward revisions in non-GAAP EPS estimates for 2025 and 2026, alongside the historically volatile nature of growth metrics such as ARPU and customer acquisition rates, could further dampen investor confidence and impact the stock’s valuation. Additionally, the macroeconomic softness affecting small to medium-sized businesses, where DigitalOcean is heavily concentrated, poses significant headwinds to its revenue growth potential in the near future.