My thoughts on all this!
After reflection, I find that I agree completely with this question of Monkey’s: Why basically does DDOG seem to be the only “reasonable” stock to hold anymore because everything else seems to have one “problem” or another.
I have noticed also that that has been the way it tends to look because everyone seems focussed on analyzing every tiny detail of each company’s report, searching for tiny faults, and then saying “Disastrous report! I’m selling out!”
Please excuse any little mistakes in the detail of numbers that I make below, but I’m going from memory here.
For example Zscaler’s billings “only” growing at 50% or 60% when they had been growing faster, to me says that I might adjust my position size slightly, not that I’d sell out.
For another example, the assertion that we should exit our fastest growing company (Sentinel) because new customers dropped from 800 last year to 750 this year. (Oops! Sorry! Last year that 800 included all the customers from an acquisition! The 750 this quarter is an all time record!)
No, Billings and New Customers for a Quarter are not the same essential reasons for which we exited Fastly, Zoom, Docu, etc
We exited Fastly because, with all their “great tech” they only added 9 new paying customers in a quarter while their competitor, Cloudflare, added 80 times as many! No, that’s not a misprint, it’s not 80% more, not even 80 customers more, but 80 TIMES as many. It was 9 compared to 720 or so! There were half a dozen other major reasons, but that one sticks in my memory.
We exited Zoom because they did it all, and signed up all the world, in a couple of Covid quarters in 2020 and there was nowhere else to go. For the next few quarters they had all those customers and all that revenue that they hadn’t had before, but it wasn’t growing hardly at all. They had already conquered the world in their niche! I kept warning that sequentially they they were hardly growing at all. Revenue growth went sequentially from something like 120% QoQ to 17% QoQ, to 8% QoQ to 5% QoQ, but they were still showing 350% growth year over year each quarter because their revenue was so much above pre-covid. And then, after four quarters, year over year collapsed as well, as they were now comparing with the big post-Covid-growth quarters.
We exited Docusign for the same reason we exited Zoom. When you have already signed up 50% or 60% of your TAM during Covid, even if your product is great (it must have been or you wouldn’t have signed them up like that), you can’t keep growing at 50% or 60% per year. Period.
For me I’m investing in hyper-successful companies and I want to keep holding them as long as the story and numbers are intact, and I’m NOT going to obsess, and go crazy trying to analyze every tiny little metric! But that’s just me, and if you want to go ahead with that, go ahead.