Datadog Inc (NASDAQ: DDOG) made a highly anticipated debut in the IPO market back in 2019, standing out as a leader in cloud infrastructure monitoring services. Its listing on the Nasdaq on September 19, 2019, marked a significant milestone for the company.
While the stock showed promise before the onset of the COVID-19 pandemic, the surge in cloud and SaaS stocks following the pandemic propelled Datadog’s stock to new heights, attracting attention from both institutional and retail investors.
In contrast to many stocks and SPACs that experienced rapid rises and subsequent declines post-COVID, Datadog’s stock has maintained its momentum despite a temporary 70% drop in value.
This resilience can be attributed to Datadog’s unwavering commitment to innovation, evident in its substantial investment of 43% of revenues in R&D, resulting in the introduction of over 400 new features in 2023.
As the stock has recovered a significant portion of its 2022 losses, the question arises: can Datadog surpass its previous all-time high? The answer to this intriguing question lies ahead as we delve deeper into its potential trajectory.
Long-Term trend intactUpon examining Datadog’s long-term weekly charts, it becomes evident that the stock’s overall bullish trend has remained unbroken, despite the setback encountered in 2022. The company embarked on its second bull run in early 2023, which has persisted without interruption thus far.
A significant portion of these gains can be traced back to the impressive Q3 2023 results Datadog reported in November of the previous year, which surpassed expectations. The stock’s subsequent surge lifted it from $80 to above $100, and it has not dipped below this level since then.
Although the stock appears to have encountered a barrier near $140 and has been fluctuating around the $120 mark for several weeks, the momentum in the long-term chart remains robust, with no technical indicators suggesting an imminent downward trend. This suggests that Datadog’s long-term growth trajectory remains solid and intact.
Short-term Momentum Building UpExamining Datadog’s daily charts reveals an intriguing pattern of accumulation. Following the stock’s Q3 results, it has primarily traded within the range of $115 to $130, which is noteworthy as these levels correspond closely to the 61.8% and 50.0% Fibonacci retracement from the all-time highs to the lows observed in early 2023.
The MACD indicator has recently turned bullish, indicating an upward momentum emerging. Furthermore, the 50-day moving average continues to remain above the 100-day moving average, which suggests a strong accumulation pattern. This is a positive sign for the stock in the medium-term.
Advice for Investors
For investors considering purchasing the stock, the current levels present an attractive opportunity to accumulate Datadog. However, they should exercise patience as the accumulation pattern may persist for an extended period. Only when the stock surpasses the 38.2% Fibonacci hurdle at $148 can it be confidently said to be on its way to new all-time highs.
Caution for Bears
Bears looking to short the stock should exercise caution and wait for signs of weakness in the daily charts. This could manifest if the MACD turns negative or if the stock closes below $110.
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