$DDOG daily pick: buy a starter after the 15% drop on a flat Q4 guide, add $166 to $189

$DDOG: I'm buying a starter in @datadoghq after a 15% drop on a flat fourth quarter guide.

Live at 12:14pm ET ($188.40):
5.5% under the 200-day
37% off the Oct 12 high
Q3 revenue $1.20B, up 35% from a year ago
Q4 guide $1.19B to $1.20B, about flat with Q3

I think the guide is conservative because Datadog has beaten revenue estimates in each of the last 7 quarters and its $100k+ customers grew 20% to about 4,860.

Is a flat guide from a company that beat 7 straight quarters a warning or a sandbag?

Not financial advice

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What spooked people: Q3 revenue grew about 7% from Q2 and the Q4 guide calls for roughly zero growth from Q3. Part of Datadog's revenue is usage based, so a flat guide reads like either slower usage or a very cautious bar from management.

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Why I still want to own it: 35% growth, $251M of free cash flow in the quarter, $5.2B in cash and securities and a 28% non-GAAP operating margin. That cash pile alone is about 8% of the market cap.

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It isn't cheap at about 64x 2027 EPS estimates, so I'm starting small. I'd add between $166 and $189, which is the top half of the gap the stock opened after its May report. If it closes under $143.71 (the May 6 close before that gap) I rethink the whole thing.

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What I'd watch: whether Q4 lands at the top of the guide or clears it when Datadog reports in February and whether the 200-day at $199 turns into a ceiling. First target is that 200-day. Second is the 50-day near $251.

Sources: Datadog Q3 2026 results: revenue $1.20B +35%, FCF $251M, Q4 guide $1.19B-$1.20B · Motley Fool: Datadog guides Q4 sales flat after 35% growth · 24/7 Wall St: Datadog tumbles despite beat, Q4 guide in line with $1.2B est · CNBC: Datadog sank 17% premarket on soft revenue guidance · Barron's: Datadog beats, stock acts as if it didn't · FMP: DDOG quote, history, estimates, earnings

Not financial advice. For informational and educational purposes only.