DDOG - Datadog: It's Not Cheap But The Best Are Rarely On Sale
2024-05-15 16:22:25 ET
Summary
- Datadog reported strong quarterly results, beating estimates and showing accelerated usage growth.
- Traders were initially unhappy with the company's guidance, causing a decline in the share price.
- The company's long-term prospects remain strong, with potential for accelerated revenue growth and increased adoption of its AI solutions.
- Datadog's platform strategy is resonating strongly with users.
- Bookings growth for the last two quarters have been at record levels.
Datadog - A Strong Quarter With Weak Guidance
Datadog reported its results on the morning of May 7 th , 2024. Traders were unhappy with the guidance, and the shares initially fell about 10% and are currently about 6% below the price before the earnings release. Datadog shares have been trading in a relatively tight range between $112 and $138 for essentially the last 6 months.
With the shares down by 10%, an analyst at one brokerage, Robert Baird, re-rated the shares - upgrading its rating to outperform from neutral. Much of the logic behind Baird's upgrade was related to the company's usage growth, as well as an assessment of the company's competitive position within the observability space.
After a substantial rally that followed quarterly results in early November 2023, Datadog shares have stalled, and have spent the last months consolidating those gains. Even decent quarterly results reported in the middle of February (really better than decent in my opinion) were insufficient to yield any material share price upside. The results the company posted a week ago were a noticeable beat compared to prior estimates. The company’s guidance was much more subdued....
Datadog: It's Not Cheap, But The Best Are Rarely On Sale