Datadog Shares Drop 4.51% Amid Earnings Jitters, Overvaluation vs Tech Sector

The share price fell to its lowest level since June 2025 today, with an intraday decline of 1.59%. Datadog (DDOG) shares have now lost 4.51% over three consecutive sessions, underperforming broader tech benchmarks. The stock’s decline marks a sharp reversal from its recent highs in late December 2025, signaling growing investor skepticism about its valuation and growth trajectory.

Analysts point to mixed signals ahead of Datadog’s upcoming earnings report. While projected Q1 revenue of $914.6 million reflects 23.97% year-over-year growth, full-year forecasts show flat revenue and modest earnings increases, raising concerns about long-term sustainability.

The Zacks Consensus EPS estimate has risen 2.61% in the past month, but the company’s Zacks Rank of #4 (Sell) underscores bearish sentiment. This rating, combined with a forward P/E ratio of 55.59—well above the tech sector average of 23.95—highlights a valuation gap that investors may be recalibrating.

Broader context reveals Datadog’s struggles within a resilient tech sector. The Computer and Technology industry gained 2.62% over the past month, contrasting with Datadog’s 10.39% drop. A PEG ratio of 4.81, compared to the industry average of 1.45, further indicates overvaluation relative to growth expectations. Market dynamics, including a 1% Nasdaq decline, also weigh on tech stocks. With a Zacks Industry Rank of 55 (top 23% of industries), the sector’s strength suggests Datadog’s underperformance stems from company-specific challenges rather than macroeconomic trends.