DigitalOcean Holdings has added another 7% this week, now trading at $160.72 — yet the more interesting story is the tension forming between a short position quietly unwinding and options traders growing more defensive as the stock approaches analyst targets.
Short sellers have been covering steadily. Short interest has fallen nearly 24% over the past month, down to 11.4% of the free float from levels above 13% in late April. The direction of travel is clear. But the weekly read is less clean — shorts actually added roughly 3% of their position back this week, nudging from around 10.1 million shares to 10.4 million. That's a pause in the unwind, not a reversal, but it's worth noting. The lending market is not a constraint here: availability is running at 318% of short interest, meaning there are more than three shares available to borrow for every one already lent out. Cost to borrow is 0.55%, essentially frictionless. Bears face no squeeze pressure whatsoever.
Options traders are taking a different view of the risk. The put/call ratio has climbed to 0.68, about 1.7 standard deviations above its 20-day average of 0.57. That's not extreme — the 52-week high is 1.00 — but it marks the most defensive options posture of the past several weeks, building through a period when the stock was rallying. Investors are paying more for downside protection even as the price continues to grind higher.
The Street's repricing after the May 5 earnings shock is still settling. Goldman Sachs, Morgan Stanley, and Barclays all raised targets dramatically in the days after the print — Goldman from $78 to $179, Morgan Stanley from $75 to $175, Barclays from $105 to $183 — and UBS followed up on May 12 with a further lift to $175, maintaining Neutral. The consensus mean target is now $177, just above the current price of $160.72. Bulls point to the AI inferencing opportunity, particularly GPU-driven PaaS and the Character.ai win, alongside exceptional EPS momentum that ranks in the 93rd percentile on a 30-day basis. Bears flag the valuation — a P/E above 114 and EV/EBITDA at 33.6 — and the company's historical positioning as a developer starting point rather than enterprise destination. With the stock almost inside the mean target, the Street may struggle to push price objectives meaningfully higher without fresh fundamental evidence.
The ownership picture warrants a brief update from last week's note. Access Industries reported holding approximately 17.9% of shares as of May 13 — down from the 21% referenced just a week ago — following its multi-hundred-million-dollar block disposal at $150–161. That drawdown in the controlling shareholder's stake has not abated. Director Warren Jenson sold a further $2.95 million worth on May 19. The combined 90-day net selling across all insiders now exceeds $569 million. The stock has continued to rise through all of it, which tells you something about the demand on the other side: institutional buyers including BlackRock (adding 2.7 million shares as of April 30) and JP Morgan Asset Management (adding 2.4 million) have been absorbing the flow. The question is how much longer that absorption holds at current prices.
The next earnings event is scheduled for August 4. With the stock trading near consensus price targets, the August print becomes less about whether DigitalOcean can grow and more about whether the AI inferencing story can justify a rerating above where the Street currently sits — and whether Access Industries has finished selling.
See the live data behind this article on ORTEX.
Open DOCN on ORTEX →ORTEX Market Intelligence content is generated by AI from a snapshot of ORTEX's proprietary data. Content is informational only and does not constitute investment advice.
