Datadog (DDOG) Stock Drops 20% After Beating Earnings. Here’s Why
TLDR
- Datadog stock fell around 20% in premarket trading despite beating Q2 earnings and revenue estimates
- EPS came in at $0.65 vs $0.58 expected; revenue hit $1.12 billion, up 36% year-over-year
- The company raised full-year EPS guidance to $2.50-$2.54 and revenue to $4.45-$4.47 billion
- Large customer count grew 23% year-over-year to 4,720 customers with over $100K in annual recurring revenue
- The drop likely reflects profit-taking after DDOG hit an all-time closing high earlier in the week, having already surged 108% in 2026
Datadog stock dropped roughly 20% to around $226 in premarket trading Thursday after the company posted Q2 results that beat on both earnings and revenue. The stock had closed Wednesday at around $283, down 1.7% on the day.
The sell-off came despite what was, on paper, a strong report. Adjusted EPS of $0.65 topped the $0.58 consensus. Revenue of $1.12 billion grew 36% year-over-year and came in above the $1.08 billion estimate.
The stock had already surged 108% in 2026, making it one of the best performers in software this year. Going into earnings, several Wall Street firms had raised their price targets, setting the bar high.
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