Datadog Stock To $97?

Our multi-factor assessment suggests that it may be time to reduce exposure to DDOG stock. We are primarily concerned current valuation and a price of $97 may not be out of reach. We believe there is not much to fear in DDOG stock given its overall Strong operating performance and financial condition. But given its Very High valuation, the stock appears Relatively Expensive.

Below is our assessment:

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Let’s get into details of each of the assessed factors but before that, for quick background: With $48 Bil in market cap, Datadog provides a SaaS platform that integrates and automates infrastructure, application performance, log, and security monitoring for developers, operations, and business users globally.

[1] Valuation Looks Very High

This table highlights how DDOG is valued vs broader market. For more details see: DDOG Valuation Ratios

[2] Growth Is Very Strong

• Datadog has seen its top line grow at an average rate of 28.0% over the last 3 years
• Its revenues have grown 27% from $2.5 Bil to $3.2 Bil in the last 12 months
• Also, its quarterly revenues grew 28.4% to $886 Mil in the most recent quarter from $690 Mil a year ago.

This table highlights how DDOG is growing vs broader market. For more details see: DDOG Revenue Comparison

[3] Profitability Appears Weak

• DDOG last 12 month operating income was $-43 Mil representing operating margin of -1.3%
• With cash flow margin of 30.8%, it generated nearly $988 Mil in operating cash flow over this period
• For the same period, DDOG generated nearly $107 Mil in net income, suggesting net margin of about 3.3%

This table highlights how DDOG profitability vs broader market. For more details see: DDOG Operating Income Comparison

[4] Financial Stability Looks Very Strong

• DDOG Debt was $1.3 Bil at the end of the most recent quarter, while its current Market Cap is $48 Bil. This implies Debt-to-Equity Ratio of 2.7%
• DDOG Cash (including cash equivalents) makes up $4.1 Bil of $6.1 Bil in total Assets. This yields a Cash-to-Assets Ratio of 68.4%

[5] Downturn Resilience Is Weak

DDOG has fared worse than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.

2022 Inflation Shock

• DDOG stock fell 68.1% from a high of $196.56 on 9 November 2021 to $62.69 on 25 April 2023 vs. a peak-to-trough decline of 25.4% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 10 November 2025
• Since then, the stock increased to a high of $199.72 on 10 November 2025 , and currently trades at $138.04

 
2020 Covid Pandemic

• DDOG stock fell 42.1% from a high of $50.01 on 12 February 2020 to $28.96 on 16 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 8 May 2020

But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read DDOG Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

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