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Did You Miss Datadog's (NASDAQ:DDOG) Impressive 129% Share Price Gain?

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Simply Wall St
·3 min read
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While Datadog, Inc. (NASDAQ:DDOG) shareholders are probably generally happy, the stock hasn't had particularly good run recently, with the share price falling 12% in the last quarter. But that doesn't change the fact that the returns over the last year have been very strong. We're very pleased to report the share price shot up 129% in that time. So it may be that the share price is simply cooling off after a strong rise. Only time will tell if there is still too much optimism currently reflected in the share price.

View our latest analysis for Datadog

Given that Datadog didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

Datadog grew its revenue by 73% last year. That's well above most other pre-profit companies. Meanwhile, the market has paid attention, sending the share price soaring 129% in response. It's great to see strong revenue growth, but the question is whether it can be sustained. The strong share price rise indicates optimism, so there may be a better opportunity for buyers as the hype fades a bit.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

earnings-and-revenue-growth
earnings-and-revenue-growth

Datadog is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. You can see what analysts are predicting for Datadog in this interactive graph of future profit estimates.

A Different Perspective

It's nice to see that Datadog shareholders have gained 129% over the last year. We regret to report that the share price is down 12% over ninety days. It may simply be that the share price got ahead of itself, although there may have been fundamental developments that are weighing on it. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. For instance, we've identified 2 warning signs for Datadog that you should be aware of.

We will like Datadog better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.