Despite better-than-expected third-quarter results and raised full-year guidance, Datadog (NASDAQ: DDOG) stock has kept dropping. The market now values the high-growth cloud monitoring specialist at a more than 25% discount to its October all-time highs. Yet the company remains exposed to the secular strong growth of its vast cloud computing market. So should you buy the dip?
Even with the threat of pricing pressures given the recent generous free offerings from the cloud monitoring competitor New Relic, Datadog posted quarterly results above guidance. Revenue increased 61.3% to $154.7 million, way above the forecast revenue range of $143 million to $145 million.
The company's land-and-expand strategy, which consists of attracting new customers that will increase their consumption of Datadog's services over time, fueled that growth. And CEO Olivier Pomel indicated during the earnings call the coronavirus-induced uncertainties that led to rationalized cloud usage in the second quarter didn't materialize in the third.
Source Fool.com