Why Datadog Stock Fell 11.2% in October

What happened

Shares of Datadog (NASDAQ:DDOG) slumped 11.2% in October, according to data from S&P Global Market Intelligence. The sell-off for the stock occurred in conjunction with a pullback for the broader market and followed a 22% increase for the company’s share price in September.

DDOG Chart

DDOG data by YCharts

Datadog stock set a new all-time in October thanks to strong momentum for its services and a new partnership with Microsoft. However, a surge in new confirmed coronavirus cases prompted increased economic uncertainty and pushed the company’s share price down double digits in the month.  

A network of cloud icons.

Image source: Getty Images.

So what

Datadog and Microsoft announced their new partnership on Sept. 30. The deal resulted in Datadog’s software being available as a first-class service on Microsoft’s Azure cloud computing platform, making it easy for Azure users to implement and set up the former company’s cloud monitoring and security services. Datadog stock saw significant positive momentum following the partnership, but shares subsequently gave up ground as sell-offs rocked the market in the month’s second half. 

Now what

Datadog stock has bounced from its sell-off last month. The stock is up roughly 14% amid momentum for the broader market early in November’s trading. 

DDOG Chart

DDOG data by YCharts

Datadog is set to report third-quarter earnings after the market closes on Nov. 10. The company is guiding for Q3 revenue to be between $143 million and $145 million, an increase of roughly 50% year over year at the midpoint of the target. Revenue for the full-year period is projected to come in between $566 million and $572 million, good for growth of roughly 57% at the midpoint.

Datadog has a market capitalization of roughly $30.6 billion and is valued at approximately 53.6 times this year’s expected sales. 

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