Should You Buy The Dip In Datadog Stock?
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Datadog (DDOG) stock has fallen 38.8% in a month, while the S&P 500 lost 3.3%. The shares fell hardest on November 4, when Datadog said its largest customer had cut its usage. Datadog had already told investors about that cut in August. A drop this fast invites buyers, though buying pays only if that cut stays with one customer and Datadog keeps turning its sales into cash. Once its largest customer is set aside, are Datadog’s sales still growing?
Outside Its Largest Customer, Datadog’s Growth Sped Up
Yes, so far. Management said on the November 4 call that revenue growth excluding the largest customer accelerated again in fiscal Q3 2026, and that growth from customers outside AI also sped up for the fifth straight quarter. Total revenue in the quarter rose 35.2% from a year earlier.
The slowdown is in the forecast. Datadog expects fourth-quarter revenue to grow 25 to 26% from a year earlier, and that forecast counts the largest customer only at its minimum commitment. Without that customer, management put the growth implied in its forecast in the low to mid-30s percent range. That range alone does not show whether that growth is still speeding up.
Management named one other short-term drag: several large customers renewed early, at higher commitments but with volume discounts. Even so, Datadog raised its fiscal 2026 revenue forecast to $4.52 billion at the midpoint, from $4.46 billion in August.
What Followed Datadog Stock’s One Earlier Drop Of 40%?
Since September 2019, Datadog stock has fallen more than 40% within 30 trading days only once, in the run to May 18, 2022. A buyer on that date was 5.0% ahead a year later. That fall came while the S&P 500 fund (SPY) lost 13.0% over the same days, meaning the whole market was sliding. This time, the drop is Datadog’s own.
| Time after a past dip | Past dips with that much time after them | Median DDOG price change |
|---|---|---|
| 21 trading days | 1 | -3.0% |
| 63 trading days | 1 | 24.0% |
| 126 trading days | 1 | -6.0% |
| 252 trading days | 1 | 5.0% |
| Dip date | Fall to dip date (DDOG / SPY) | 1 year later | Best in that year (days to it) | Worst in that year |
|---|---|---|---|---|
| 2022-05-18 | -40.0% / -13.0% | 5.0% | 33.7% (84 days) | -28.8% |
| Median of 1 complete year | – | 5.0% | 33.7% (84 days) | -28.8% |
Datadog Is Turning Less Of Its Sales Into Cash
Cash from operations came to 34.3% of Datadog’s revenue in fiscal Q4 2025, before dipping to 33.2% in fiscal Q1 2026. It fell again to 28.2% in fiscal Q2 and 24.2% in fiscal Q3. The dollar amount still rose, reaching $290 million in fiscal Q3 from $251 million a year earlier. Datadog also holds more cash than debt, finishing September with $5.23 billion in cash and short-term investments against $1.31 billion of debt.
Buyers pay 15.1 times sales for Datadog stock, compared with 3.1 times for the S&P 500. At that price, they are paying for growth more than for today’s profit: Datadog’s reported operating margin over the last twelve months was 2.3%, against 19.0% for the S&P 500.
What Is A Datadog Buyer Betting On Now?
A buyer today is betting that Datadog keeps growing faster outside its largest customer, as management says it did in fiscal Q3. The cash side is weaker, with the share of revenue kept as operating cash lower in each quarter of fiscal 2026. The one earlier drop of more than 40% left a buyer ahead a year later, but only after a further fall along the way. The share of revenue Datadog keeps as operating cash is the figure to watch in its fiscal Q4 2026 report.
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