Currently, many people are excited about the Digital Ocean (DOCN). You can read the recent viral bullish report (forecast) here - https://citronresearch.com/wp-conte...gitalOcean-The-Shopify-of-Cloud-Computing.pdf. Shortly, Digital Ocean seems to be what Shopify was several years ago. The bulls say that buying DOCN stocks now gives you a chance to multiply your money several times. I'd like to present the bearish case for DOCN. Note that all my considerations refer to long-term investments for several years, not to short-term trading. Currently, I am a client of the Digital Ocean company, and I am happy with its services. However, it doesn't make me very bullish on its stock. The problem is that the company does not have good protection against its competitors - AWS, Azure, Google Cloud. In investment books, such an unfavorable situation is called a narrow protective moat. The Digital Ocean company offers cloud storage and computing services that are simpler and cheaper than its competitors. However, nothing prevents competitors from replicating the same set of services, possibly under new brands. Almost certainly, something like AWS Light and Azure Light will appear in the coming years. It is not very easy for customers to switch from one cloud provider to another, but still, it is easy. It means that the Digital Ocean company will never become a cash cow like Facebook or Twitter. They will always have to spend most of the profits to fend off competitors. Please note that the DOCN IPO happened recently like many other IPOs. Initial investors usually don't want to sell their shares cheaply. If the market situation is unfavorable, they postpone the IPO. Based on the above, I do not consider the DOCN stocks undervalued. The hype on Twitter seems excessive to me. Do you think I am wrong?
Same here. But I'm hearing from more informed people around me that there's serious competition from European providers that is better value. There's many more than just Google, Microsoft and Amazon. For example with Hetzner, I can get 3vCPU, 4GB RAM, 80GB space cheaper. DigitalOcean's closest offer is 1vCPU, 2GB RAM and less space for slightly more money. Fewer locations but for latency insensitive stuff, not relevant.