DOCN
DigitalOcean Holdings, Inc.
$109.29
Platform & Compounding FCF
50%
Two-stage FCF DCF
Strong
·
Conviction
Overvalued
Trading 343.1% above fair value
You pay
$109.29
Bear
$10.24
Fair
$24.66
Bull
$44.24
Bear
$10.24
-90.6%
14% stage 1 growth, 12% discount
Fair
$24.66
-77.4%
24% stage 1 growth, 12% discount
Bull
$44.24
-59.5%
31% stage 1 growth, 12% discount
Adjust Assumptions
23.7%
12.0%
3.0%
Key Value Driver
FCF growth rate (24% base case)
Terminal Value % of EV
44%
Implied Market Multiple
203.5x
Market is pricing in (growth)
42.8%
vs 23.7% base
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (19 analysts)
$175.45
Divergence from AlphaVal
86%
Summary
Using a two-stage FCF DCF with 24% growth decelerating over 15 years, discounted at 12%, the base-case intrinsic value is $24.66 per share.
Warnings
Stock-based employee pay equals 31% of profits. This dilutes existing shareholders, so cash flow alone overstates what owners really earn.
Wall Street's average price target is $175.45 (from 19 analysts). Our estimate is 86% below the consensus -- consider that gap carefully.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions