Why Datadog Stock Collapsed Tuesday
Shares of (NASDAQ: DDOG) were down 19% as of 12:19 p.m. ET on Tuesday. The software monitoring provider reported revenue growth of 25% year over year but issued cautious commentary about near-term revenue trends.
Slowing top-line growth has weighed on top software stocks. Despite falling 46% from their previous peak, Datadog shares still trade at a high price-to-sales ratio, so news that revenue will likely remain under pressure through the end of the year is not what Wall Street wanted to hear.
While revenue of $509.5 million in the quarter was better than previous guidance, management noted that some large customers are still optimizing their spending on the cloud. Like other cloud service providers, Datadog earns money on a consumption basis. The company grows revenue as customers expand their workloads in the cloud.
Source Fool.com
