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DigitalOcean Holdings, Inc. (DOCN) — WACC Analysis

WACC Breakdown

DigitalOcean Holdings, Inc. (DOCN) has a weighted average cost of capital (WACC) of 12.2%. The cost of equity is 12.9%, derived from a beta of 2.22 and a risk-free rate of 5.2%. The after-tax cost of debt is 2.7%. The capital structure is 93.3% equity and 6.7% debt.

Interpretation

A WACC of 12.2% indicates that the market perceives DigitalOcean Holdings, Inc. as higher-risk, requiring a greater return to compensate investors.

Investors can compare DOCN's WACC of 12.2% against industry peers to gauge its relative financing costs. A beta of 2.22 reflects the stock's volatility relative to the broader market.

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VALUATION

DOCN WACC: 12.18% for DigitalOcean Holdings, Inc.

Current inputs imply a 12.86% cost of equity and a 3.42% pre-tax cost of debt. Use this discount rate as a starting point for DCF validation.

[01]Current Market Data
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WACC Calculation Process
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Market Data Loaded
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Company Data Fetched
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Beta Calculated (5Y)
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Inputs Auto-Populated
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WACC Calculated
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Step 2: Enter Ticker Symbol
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Step 4: Review Auto-Populated WACC Inputs

Values are automatically populated from real data. You can adjust them manually if needed.

4.30%
1.000
4.23%
5.00%
21.00%
70.00%
Debt: 30.00%Equity: 70.00%

Please enter a valid company ticker to calculate WACC

DigitalOcean Holdings, Inc. Common Stock (DOCN) WACC Results
Weighted Average Cost of Capital
12.18%
Cost of Equity
12.86%
Risk-Free Rate5.19%
Beta2.22
Market Risk Premium4.23%
Cost of Debt
2.70%
Pre-Tax Cost of Debt3.42%
Tax Rate21.00%
Tax Shield0.72%
Capital Structure
Equity: 93.32%($12.87B)
Debt: 6.68%($921.05M)
Equity Component
12.00%
93.32% × 12.86%
Debt Component
0.18%
6.68% × 2.70%

DigitalOcean Holdings, Inc. (DOCN) WACC in context

DigitalOcean Holdings, Inc. (DOCN) currently screens with an estimated WACC of 12.18%. That blends a 12.86% cost of equity, a 3.42% pre-tax cost of debt, and a 93.32% equity weight into the discount rate you would typically use in a DCF model.

screens as a relatively high discount rate, which makes valuation more sensitive to execution and capital structure risk.

What DOCN WACC implies

A 12.18% discount rate screens as a relatively high discount rate, which makes valuation more sensitive to execution and capital structure risk.

How this page calculates DOCN

This page combines CAPM-based cost of equity with SEC-derived debt and capital structure inputs. The current beta is 2.22 and equity accounts for 93.32% of capital.

What to do next

Validate business quality on the company page, then carry the same discount-rate assumptions into the DCF page to test fair value sensitivity.

Disclaimer: This is not financial advice. Data sourced from SEC EDGAR and Polygon.io. Past performance does not guarantee future results. Always conduct your own research before making investment decisions.