What Happened: Shares of cloud monitoring software company Datadog (NASDAQ:DDOG) jumped 22.4% in the morning session after the company reported an impressive "beat and raise" quarter. Third quarter results blew past Wall Street's expectations for revenue, non-GAAP operating profit and earnings per share. We were also impressed by Datadog's significant improvement in new large contract wins, which helped contribute to the revenue beat. In addition, gross margin improved, and the company continued to generate positive cash flow.
Looking ahead, management provided an optimistic outlook as they raised guidance for revenue, non-GAAP operating income, and EPS for the full year, all surpassing consensus estimates. Revenue guidance for the next quarter also exceeded expectations. Overall, it was a fantastic quarter that should have shareholders cheering.
Is now the time to buy Datadog? Find out by reading the original article on StockStory.
What is the market telling us: Datadog's shares are very volatile and over the last year have had 29 moves greater than 5%. But moves this big are very rare even for Datadog and that is indicating to us that this news had a significant impact on the market's perception of the business. The previous big move we wrote about was 29 days ago, when the company dropped 5.7% on the news that Bank of America analyst Koji Ikeda downgraded the stock's rating from Buy to Neutral and lowered the price target from $123 to $105. The analyst cited concerns over conservative demand, heightened competition, and potential AI-related growth delays.
Datadog is up 42.5% since the beginning of the year, but at $102.92 per share it is still trading 11.8% below its 52-week high of $116.72 from July 2023. Investors who bought $1,000 worth of Datadog's shares at the IPO in September 2019 would now be looking at an investment worth $2,736.
