DDOG - Datadog: Solid Execution But Stock Is Fully Priced

2024-02-22 16:58:56 ET

Summary

• With the stock market still strikingly expensive despite a recent mini-correction, it's best to stay away from expensive growth stocks.
• Datadog's shares fell despite strong Q4 results, reflecting its incredibly high valuation multiples. Even post-correction, the stock sits at ~15x revenue.
• Competition, usage trends, and high valuation are the main risks for Datadog, making it advisable to wait for a better price.

After months of rallying toward a record S&P 500 milestone at 5,000, the market saw its first signs of cracking on the basis of higher-than-expected inflation data. This calls to mind a sobering reality: interest rates are still higher than we've seen over the past decade, and yet stock valuation multiples are still sitting at historic highs....

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