Is DigitalOcean Holdings, Inc. overvalued or undervalued?

As of 6 May 2021, DigitalOcean Holdings, Inc. has moved from a grade of "does not qualify" to "risky." The company is currently considered overvalued based on its financial metrics. Key ratios include a P/E ratio of 24, an EV to EBITDA of 15.65, and a PEG ratio of 0.23. These figures suggest that while the company has potential growth, its current valuation does not align well with its earnings and cash flow generation capabilities.
In comparison with peers, DigitalOcean's P/E ratio of 23.41 is significantly higher than HashiCorp, which has a P/E of -56.15, and Intapp, which stands at -219.95. Furthermore, its EV to EBITDA ratio of 15.38 is more favorable than that of Envestnet, which is at 19.46. The company's stock has underperformed against the S&P 500, with a year-to-date return of -18.14% compared to the index's 2.44%, reinforcing the notion that DigitalOcean may be overvalued in the current market environment.