Is ddog a good stuck to buy? And why
3/1/2025 07:42pm
**Datadog (DDOG) appears to be a strong candidate for investment**, and here's why:
1. **Solid Revenue Growth and Market Position**: Datadog has demonstrated a 25.1% increase in revenue year-over-year, reaching $737.73 million in Q4 2024, surpassing the estimated $711.65 million. This growth is a testament to the company's ability to expand its customer base and enhance its service offerings. As a leader in cloud-native monitoring and analytics, Datadog's innovative platform positions it well in the growing IT infrastructure monitoring and analytics space.
2. **Consistent Customer Growth**: The company has seen a significant increase in the number of customers with an annual run rate (ARR) of $100,000 or more, reaching 3,610 customers, up from 3,190 a year ago. This indicates a strong land-and-expand business model and a high customer retention rate, with 83% of customers using two or more products.
3. **Technical Indicators Showing Strength**: From a technical perspective, Datadog's stock has recently surpassed resistance at the 50-day moving average, suggesting a short-term bullish trend. The stock's recent price increase of 2.66% reflects its momentum.
4. **Dividend Yield**: Datadog currently offers a dividend yield of 0%, which may not be attractive for income-focused investors. However, the company's strong growth prospects and market position could make it an appealing long-term investment.
|Ticker|Name|Date|Net Income YoY|Total Revenue YoY|Diluted EPS YoY|code|market_code|
|---|---|---|---|---|---|---|---|
|DDOG.O|Datadog|2024 Q1|276.9949348169061|26.89126743254296|250|DDOG|185|
|DDOG.O|Datadog|2024 Q2|1204.1572184429328|26.659404074902838|1300|DDOG|185|
|DDOG.O|Datadog|2024 Q3|128.44454264250996|26.02203325443441|133.33333333333337|DDOG|185|
|DDOG.O|Datadog|2024 Q4|-15.555720185950031|25.11290615264335|-13.333333333333327|DDOG|185|
5. **Financial Health and Future Outlook**: Despite some optimization and volume discounts related to contract renewals, Datadog maintained a gross margin of 81.7% and an operating income of $179 million, indicating efficient cost management. The company's forward guidance for 2025 suggests a potential operating income of $655 million to $675 million, which could be a positive sign for long-term profitability.
6. **Market Sentiment and Analyst Ratings**: Despite a recent decline in stock price due to disappointing guidance, Datadog's stock has a Zacks Rank #3 (Hold) rating, indicating it could perform in line with the broader market. The company's Momentum Style Score of A and VGM Score of B suggest it is a strong momentum stock.
In conclusion, Datadog's strong revenue growth, consistent customer growth, technical indicators showing strength, and solid financial health make it a compelling investment candidate. However, potential investors should consider the company's dividend yield and market sentiment, as well as their own risk tolerance and investment goals.