16.6% right now.
For what it’s worth I bought some. 30% above where I sold it a few months ago D:
They are executing super well. Own more ESTC but think both are worth it.
1 Like
Hi All-
Here’s my take on Datadog
Earnings = 0.05 (average estimates were 0.01, so no worries with the earnings)
Revenue = 140M (revenue growth decelerated from 87% to 68% QoQ)
Cash Flow Remains High 18.6M vs. 18.3M the previous quarter.
Customers with ARR > 100k = 1015 (+84% YoY)
I think the revenue deceleration is driving the stock dwon. It seems like COVID is sinking it’s teeth into many of our stocks. I’m conflicted. I think the best place for money now to be is likely FSLY, NET, MELI and ZM. For what it’s worth, I will probably redeploy half of my funds in DDOG.
Best,
bulwnkl
Long Datadog 18.8%
https://investors.datadoghq.com/news-releases/news-release-d…
7 Likes
Several of the companies we follow on this board announced Q2 this week, some yesterday, many today, most (I think all) with
- Great quarter numbers
- But reduced guidance, in some way, compared to the previous quarter
- And are getting hammered in after-hours trading, and likely tomorrow, and maybe even after
Some messaged a softer Q3 than initially thought, or a softer 2020 outlook, but all in all, their businesses are still very strong. But, valuations are getting hammered in after hours, and might continue to trail off, but let’s look at it from the perspective of time, e.g. when they crossed those price points last.
For example, AYX beat, but reduced 2020 guidance, and are down in after hours trading about 17% to $135, but that’s the price they were at in mid-June, only about 2 months ago!
Similarly, DDOG beat, increased gross margin % !(to 80%), but suggested Q3 might be a little (relatively) softer, and are down in after hours to ~$75, which is the price they were in mid-June!
What’s my point? These are near term “corrections” but really don’t inform the quality of the underlying business of the companies. They are still strong (most very strong, in fact), and this resetting (so to speak) was not a surprise (and there still could be some additional resetting in the coming weeks) but should be comprehended in a longer view context. Many (most) are still strong companies and will remain strong even after COVID tailwinds subside. This correction only takes us back a few months (2?) in terms of share price.
59 Likes
Bulwnkl,
Just curious, what were you expecting? It was expected that revenue would be around $135 million this quarter…
Were the results really disappointing?
Is the long term thesis of the company busted?
It looks like the drop may be due to the announced acquisition of Undefined Labs - no financial details in the release.
https://investors.datadoghq.com/news-releases/news-release-d…
3 Likes
These are high growth stocks selling at rich valuations at times. Expect volatility. If you can’t handle that, maybe you shouldn’t be invested in them. I think it is much better to follow the businesses rather than following daily price fluctuations. It helps you make better investing decisions.
Don
10 Likes
the drop is because they posted 68% growth down from 85%. Their earnings beats went from 10.3% to 2.9%. The market was expecting much more from DDOG. In addition they projected 50% growth next quarter which is WAY lower than previous quarters. This would have been a great quarter for almost any company EXCEPT ddog since DDOG had such a high valuation. The valuation is now appropriately resetting.
Nothing about the thesis is broken, the call is very positive. The reality is companies are trying to save money and that has finally trickled into our companies.
27 Likes
I agree with you on the quality of the companies. The question is how much of a deceleration are they going to face. With a hypergrowth stocks at a high PS, deceleration in earnings can be catastrophic. Granted, these stocks WILL NOT go to zero, but they can equilibrate to lower prices, if the deceleration is long lasting.
Truth be told, I love the business models for DDOG, AYX, and many of the stocks covered on this board. I have held AYX for about 3 years. However, our stocks ARE NOT INEXPENSIVE and they require growth to support their prices. I view this as part of my work to continue to uncover the best growth stocks wherever they may be.
Maybe even the best of breed will get hit by hard by COVID, and the only thing to do is sit tight. I’ll wait and see, but I will make adjustments along the way.
Best,
bulwnkl
12 Likes
And to the point, y’all know these companies are in a parabolic bubble right now? Further to the point, a few big trades in thinly-traded after hours means absolutely nothing one way or the other?
Huge, big money has flowed into this sector in the last several months - it’S THE place to be. Given that, it doesn’t take much of a “deleveraging” event to spike the price down a little bit.
Anyone that’s investing in this extremely volatile - but very promising - sector, which, opposed to 1999, has ACTUAL revenues and actual high growth ; WITHOUT understanding that day-day or week to week drawdowns of 20% is to be EXPECTED: get. out. now.
It’s certainly feasible that the big money will decide “ya know what? Time to book some profits and take some volatility off the table” at any moment, which will drive the prices down somewhat. That is the problem with jumping in on any parabolic upward trend after its been on awhile.
For those investing money here you can’t afford to lose: Don’t.
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I picked up FSLY yesterday to add to my existing level. Was too busy with work today after market close and missed the DDOG drop to mid 70’s. If it does go there tomorrow AM will pick up some DDOG as well. I personally like DDOG over FSLY though have equal weighting in both currently. I think in another 3-6 months we will be taking out current highs again for both stocks. I do not see the curent environment winding down soon. I think there will be significant Work from home for many companies and many schools/colleges will continue to be online. I expect to see both companies beat their projections comfortably.
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