Analysts Are Optimistic We'll See A Profit From DigitalOcean Holdings, Inc. (NYSE:DOCN)

DigitalOcean Holdings, Inc. (NYSE:DOCN) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. DigitalOcean Holdings, Inc., through its subsidiaries, operates a cloud computing platform in North America, Europe, Asia, and internationally. With the latest financial year loss of US$28m and a trailing-twelve-month loss of US$6.9m, the US$2.7b market-cap company alleviated its loss by moving closer towards its target of breakeven. Many investors are wondering about the rate at which DigitalOcean Holdings will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

View our latest analysis for DigitalOcean Holdings

DigitalOcean Holdings is bordering on breakeven, according to the 12 American IT analysts. They anticipate the company to incur a final loss in 2022, before generating positive profits of US$3.7m in 2023. So, the company is predicted to breakeven approximately a year from now or less! How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 115% year-on-year, on average, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Given this is a high-level overview, we won’t go into details of DigitalOcean Holdings' upcoming projects, however, take into account that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before we wrap up, there’s one issue worth mentioning. DigitalOcean Holdings currently has negative equity on its balance sheet. This can sometimes arise from accounting methods used to deal with accumulated losses from prior years, which are viewed as liabilities carried forward until it cancels out in the future. These losses tend to occur only on paper, however, in other cases it can be forewarning.

Next Steps:

There are key fundamentals of DigitalOcean Holdings which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at DigitalOcean Holdings, take a look at DigitalOcean Holdings' company page on Simply Wall St. We've also put together a list of essential aspects you should look at:

1. Valuation: What is DigitalOcean Holdings worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether DigitalOcean Holdings is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on DigitalOcean Holdings’s board and the CEO’s background.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.