What happened?
Shares of cloud monitoring platform Datadog (NASDAQ: DDOG) fell 10.1% in the morning session after the company reported third quarter results which failed to impress as new large contract wins shrunk.
According to the company press release, Datadog announced better-than-expected revenue in Q3 2026, with sales up 35.2% year on year to $1.20 billion. Its non-GAAP profit of $0.81 per share was 26.4% above analysts' consensus estimates.
On the other hand, it projected fourth-quarter revenue between $1.19 billion and $1.20 billion, roughly inline with the consensus estimate.
That range also implies sequential top-line growth of merely $3 million at the upper bound from the $1.197 billion generated in the third quarter, while the midpoint points to an outright quarterly contraction.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Datadog? Access our full analysis report here, it’s free.
What is the market telling us
Datadog’s shares are extremely volatile and have had 43 moves greater than 5% over the last year. But moves this big are rare even for Datadog and indicate this news significantly impacted the market’s perception of the business.
Datadog is up 45.1% since the beginning of the year, but at $194.10 per share, it is still trading 33.8% below its 52-week high of $293.26 from October 2026. Investors who bought $1,000 worth of Datadog’s shares 5 years ago would now be looking at an investment worth $1,163.
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