Datadog after price collapse: Attractive stock with potential, says financial expert

Datadog after price collapse: Attractive stock with potential, says financial expert

The shares of the US tech group Datadog fell by a whopping 20% ​​after the quarterly figures were announced and are now over 50% below their all-time high from autumn 2021. The company's sales rose by 25% in the second quarter of 2023 due to an increasing number of customers. The operating profit remained slightly negative, but free cash flow was clearly positive at $142 million. However, the outlook for the current financial year was seen as less positive as the sales forecast was lowered.
In the long term, Datadog is well positioned as digitalization advances and leads to increasingly complex IT landscapes in the cloud. The company is a leader in monitoring these systems and should grow more strongly as the economy improves. The stock's valuation is high, but attractive due to the expected company growth.
Source: According to a report by www.aktienwelt360.de

My analysis:
The 20% drop in Datadog's share price after its quarterly earnings release appears to be exaggerated. The company's sales increased by 25% due to an increase in the number of customers. Free cash flow was also clearly positive at $142 million. However, the outlook for the current financial year was received negatively as the sales forecast was lowered. This probably led to the price crashing. In the long term, Datadog is well positioned as digitalization advances and leads to increasingly complex IT landscapes in the cloud. The positive development in the area of ​​artificial intelligence also supports this. The stock's valuation is high, but the valuation could be reduced as the company continues to grow. I therefore consider the share attractive due to its long-term growth prospects.