Datadog’s Stock Price Takes a Dip Following Neutral Rating from DA Davidson
April 7, 2023
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Recent news of DA Davidson’s initiation of coverage on Datadog ($NASDAQ:DDOG) stock with a neutral rating has caused the stock price to take a dip. Datadog is a cloud-based monitoring and analytics platform that helps businesses to better manage their cloud, hybrid, and on-premises environments. It offers insights into infrastructure and application performance, as well as real-time visibility into changes in the IT environment. The DA Davidson rating is a cautionary tale for investors, suggesting that short-term outlooks for the stock may not be overly optimistic. Datadog has seen strong growth in recent quarters and its customer base continues to expand.
However, the flipside is that the company faces fierce competition from the likes of Splunk, New Relic and SolarWinds. This makes it difficult for Datadog to stand out from the rest.
Additionally, rising costs related to marketing and sales could potentially put a dent in the company’s overall financial performance going forward. In spite of the bearish rating from DA Davidson, investors should not be too quick to desert Datadog entirely. With its impressive growth rate and its solid customer base, Datadog has all the ingredients needed to become a strong stock performer. It remains to be seen whether or not the company can capitalize on its strengths and make the most of its opportunities.
Stock Price
On Thursday, DATADOG‘s stock price took a dip following a neutral rating from DA Davidson. The stock opened at $65.6 and closed at $65.8, representing a decline of 0.4% from the prior closing price of 66.1. This follows the release of DA Davidson’s report which rated DATADOG’s stock as “Neutral”, citing potential risks with the company’s high valuation and potential competition in the market. Although the stock decline was minimal, it is indicative of the market’s cautious reaction to the report’s findings. Live Quote…
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for Datadog. More…
| Total Revenues | Net Income | Net Margin |
| 1.68k | -50.16 | -3.0% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for Datadog. More…
| Operations | Investing | Financing |
| 418.41 | -384.67 | 36.02 |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for Datadog. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 3k | 1.59k | 4.42 |
Key Ratios Snapshot
Some of the financial key ratios for Datadog are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| 66.5% | – | -1.3% |
| FCF Margin | ROE | ROA |
| 21.1% | -1.0% | -0.4% |
Analysis
GoodWhale has conducted an analysis of the financials of DATADOG. Our Risk Rating has determined that DATADOG is a medium risk investment in terms of its financial and business aspects. Specifically, when looking at the income sheet, balance sheet, and cashflow statement, we have identified three risk warnings that need to be monitored. We urge interested investors to register with GoodWhale to access our detailed report regarding DATADOG. Our report will provide an in-depth look at the financial and business aspects of the company that will allow you to make an informed decision about investing. With GoodWhale, you can easily track and monitor the performance of your investments to ensure that your portfolio is on track and up to date. More…
Peers
Datadog Inc is a cloud-based monitoring and analytics platform for IT, Operations and Development teams who write and run applications at scale, and is used by organizations of all sizes. Founded in 2010, Datadog is headquartered in New York City with offices in France, Germany, and the United Kingdom.
Datadog’s primary competitors are Dynatrace Inc, Elastic NV, and New Relic Inc. These companies are also cloud-based monitoring and analytics platforms that provide similar services to Datadog.
– Dynatrace Inc ($NYSE:DT)
Dynatrace Inc is a publicly traded American software intelligence company based in Waltham, Massachusetts with a market cap of $9.67B as of 2022. The company offers various application performance management (APM) products. Its products are used by companies to monitor the performance of software applications and services.
Dynatrace’s ROE of 3.59% is lower than the average of its competitors, which is around 7%. This indicates that the company is not generating as much profit from its equity as its competitors. One reason for this could be that Dynatrace is reinvesting its profits back into the business in order to grow. Another reason could be that the company has higher operating expenses than its competitors.
– Elastic NV ($NYSE:ESTC)
Elastic N.V. is a Netherlands-based company engaged in the provision of software solutions. The Company’s products include Elastic Stack, X-Pack, and Elastic Cloud. The Elastic Stack is a set of software products that combine data from any source with any format and search, analyze, and visualize it in real time. X-Pack is a set of software products that provides security, alerting, monitoring, reporting, machine learning, and graph capabilities for Elastic Stack. Elastic Cloud is a cloud service that offers hosted versions of the Elastic Stack.
– New Relic Inc ($NYSE:NEWR)
New Relic Inc is a publicly traded American software analytics company based in San Francisco, California. The company’s market cap as of 2022 was 3.84 billion dollars, and its ROE was -41.23%. New Relic was founded in 2008, and it provides software analytics products that help developers monitor the performance of their applications.
Summary
Datadog (DDOG) is a SaaS monitoring platform used to collect and analyze performance metrics in real-time. Recently, DA Davidson initiated coverage on the stock with a neutral rating, leading to a slight drop in the stock’s price. Investment analysis of the company has been mixed, with some expressing caution due to the large market size and competitive landscape, while others are optimistic about the company’s strong product suite and rapid growth.
The company’s metrics of active users, revenue and customer retention have seen strong gains over the past few quarters, and analysts believe this trend will continue. While Datadog is unprofitable, it has been able to reduce its cash burn rate and expansion plans are likely to be significantly impacted by the current macroeconomic environment.
