DDOG Stock Heads For Record Single-Day Drop Despite Q2 Earnings Beat, Raised Guidance

• Datadog shares plunged in pre-market trading despite the company reporting second-quarter revenue and earnings that topped Wall Street estimates.
• The company also raised its full-year revenue and earnings outlook while reporting continued growth in high-value enterprise customers.
• The selloff put the stock on track for its largest single-day decline on record, exceeding its previous biggest drop of about 17.8% in March 2020, according to Koyfin data.

Shares of Datadog (DDOG) plummeted in early morning trade on Thursday despite the company reporting second-quarter revenue and earnings that came in ahead of Wall Street estimates. 

DDOG stock fell as much as 20% in pre-market trade, on track to clock its largest single-day drop on record. According to Koyfin data, Datadog's previous biggest one-day drop was about 17.8% in March 2020.

The move comes after DDOG stock hit an intra-day record high of over $292 in the previous session. Its value has more than doubled over the past year. 

The company reported earnings of $0.65 per share, beating Wall Street’s expectation of $0.58 earnings per share (EPS). Revenue came in at $1.12 billion, beating the consensus estimate of $1.08 billion, according to Koyfin.

Datadog Grows Enterprise Customer Base

Datadog also reported strong growth in the quarter among “large customers.” The company ended the second quarter with about 4,720 customers contributing annual recurring revenue of more than $100,000, up from 3,850 customers last year.

Looking ahead, Datadog forecast third-quarter (Q3) adjusted earnings between $0.63 and $0.65 per share on revenue of $1.135 billion to $1.145 billion. Analysts were expecting earnings of $0.61 per share and revenue of about $1.11 billion for the quarter.

The company also lifted its full-year outlook. Datadog now expects adjusted earnings of $2.50 to $2.54 per share on revenue between $4.45 billion and $4.47 billion.

Retail Investors Debate Datadog's Valuation

On Stocktwits, retail sentiment around the analytics company remained in ‘extremely bullish’ territory over the past day, while chatter rose to ‘high’ from ‘normal’ levels. 

Some retail investors on the platform argued the selloff reflected concerns over valuation rather than the company's operating performance. One investor described Datadog as a "great company" but said its valuation multiples remained "bonkers."

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