Data Storage Stock Explodes 53% Amid Strategic Deal, But Can the Surge Last?

• Data Storage (DTST) soars 53% to $5.18 on news of a definitive agreement to sell CloudFirst subsidiary to Performive.
• Transaction requires shareholder approval at September 10 meeting, with proceeds earmarked for a 85% share buyback and high-growth sector acquisitions.
• Stock trades at 365% turnover rate, shattering 52-week low of $2.93 while approaching 2025 peak of $6.25.

Today’s meteoric rise marks a dramatic reversal from DTST’s 2024 slump, fueled by strategic clarity around its portfolio reshaping. The $4.23-$5.44 intraday range underscores investor enthusiasm for the company’s new capital allocation strategy.

Strategic Sale of CloudFirst to Performive Ignites 53% Surge
The explosive move stems directly from DTST’s July 11 announcement to sell its CloudFirst subsidiary to Performive, a cloud infrastructure firm backed by Renovus Capital. Investors are pricing in dual catalysts: immediate capital gains from the sale and the company’s plan to repurchase 85% of its shares using proceeds. CEO Chuck Piluso’s emphasis on ‘strategic opportunities in high-growth sectors’—including AI, cybersecurity, and healthcare automation—further fueled speculation about accretive acquisitions. The deal’s shareholder approval requirement (September 10) introduces execution risk, but the market is currently pricing in a positive outcome.

Technical Bull Run Hits Resistance—Focus on Buyback Catalysts
Technical indicators reveal an overbought condition:
- RSI: 46.15 (neutral, below overbought 70 threshold)
- MACD: +0.0058 histogram (bullish crossover confirmed)
- Bollinger Bands: Current price $5.18 exceeds upper band ($3.60) by 43%, signaling extreme volatility.

Despite the rally, the 200-day moving average ($3.86) remains far below current levels, suggesting a potential retracement risk if shareholder approval is delayed. Aggressive bulls should target entry below $5.00, with $5.50 as near-term resistance. The lack of options liquidity (zero contracts listed) forces traders to focus on the underlying stock. Consider a tight stop-loss near $4.80 to capture the buyback narrative.

Action Alert: Hold positions above $4.90 while awaiting September’s shareholder vote. A breakdown below $4.50 could trigger profit-taking ahead of the critical approval date.

Backtest Data Storage Stock Performance
The backtest of DTST's performance after an intraday surge of 53% shows mixed results. While the 3-day win rate is high at 44.86%, the 10-day win rate is slightly lower at 41.12%, and the 30-day win rate is comparable at 44.86%. The average returns over the short-term periods are positive, with a 3-day return of 0.29%, a 10-day return of -0.29%, and a 30-day return of 0.54%. The maximum return during the backtest period was 0.69% on day 54, indicating that while there is potential for gains, the strategy also involves some risk.

Hold or Sell? Data Storage Faces Key Tests Ahead
While DTST’s 53% surge is breathtaking, sustainability hinges on three factors: shareholder approval of the CloudFirst sale, execution of the buyback, and progress in high-growth sector acquisitions. Microsoft’s (MSFT) -0.02% dip today underscores broader sector caution, but DTST’s breakout suggests it’s decoupling from software infrastructure peers. Investors should monitor trading volumes post-September 10—sustained turnover above 300% could validate institutional interest. For now, this is a ‘approve-or-die’ trade: if the deal collapses, the $3.38 previous close becomes a critical support level. Stay vigilant—this stock is flying on hope, not fundamentals yet.