Datadog Stock Plunges 19% Despite Beating Earnings

Datadog stock plunged about 19% in early trading on Wednesday, November 4, 2026, falling to around $179, even though the company beat Wall Street's earnings and revenue estimates. The sell-off was driven by December-quarter guidance that came in just below expectations and pointed to flat sequential revenue growth — a red flag for a stock that had already jumped 61% in 2026 before the report.

What happened

Datadog, the New York-based observability platform used to monitor cloud infrastructure and applications, reported third-quarter results before the open on Wednesday. By the headline numbers, it was a strong quarter. Revenue climbed 35% year over year to $1.20 billion, ahead of the $1.146 billion analysts had modeled. Adjusted earnings came in at $0.81 per share, up about 47% from a year earlier and well above the $0.64 consensus estimate.

GAAP operating income reached $75 million, versus a $5.8 million loss a year earlier. Non-GAAP operating income rose to $334 million, a 28% margin. Datadog generated $290 million in operating cash flow and $251 million in free cash flow, and ended September with about 4,860 customers spending at least $100,000 a year — up 20%.

Why the stock is falling anyway

The problem was the outlook, not the quarter. For the fourth quarter ending in December, Datadog guided revenue to a range of $1.19 billion to $1.20 billion. At the midpoint of $1.195 billion, that sits just below the $1.2 billion Wall Street had modeled — and, more importantly, it implies essentially no growth from the third quarter's $1.20 billion. For a company valued on rapid expansion, a flat sequential guide reads as a slowdown, however modest.

Guidance for profitability also stepped down from the third quarter's pace. Datadog expects fourth-quarter non-GAAP operating income of $280 million to $290 million and adjusted earnings of $0.69 to $0.71 per share, both below the third quarter's delivered figures. The stock's reaction was swift: shares gapped down in early trading, slicing below the 200-day moving average, and Datadog appeared near the top of premarket decliner lists, down roughly 17–19%.

Context matters: the shares had run up 61% in 2026 heading into the print, leaving little room for disappointment, and the stock also fell sharply in August after a full-year outlook update. When a high-multiple name prices in perfection, even a small guidance miss can trigger an outsized move.

The key facts

Q3 revenue: $1.20 billion, up 35% year over year, versus $1.146 billion expected.
Q3 adjusted EPS: $0.81, up about 47%, versus $0.64 expected; GAAP EPS was $0.32.
Q4 revenue guidance: $1.19–$1.20 billion, midpoint $1.195 billion versus $1.2 billion modeled — flat sequentially.
Full-year 2026 guidance: revenue of $4.515–$4.525 billion, non-GAAP operating income of $1.095–$1.105 billion, and adjusted EPS of $2.73–$2.75.
Large customers: about 4,860 customers with at least $100,000 in annual recurring revenue, up 20% year over year.
Stock move: down about 19% to around $179 in early trading Wednesday, below its 200-day moving average.

Why it's blowing up

Datadog sits at the center of two of the market's favorite themes: cloud software and artificial intelligence. Investors increasingly view its platform as key infrastructure for monitoring AI systems and applications, and CEO Olivier Pomel pointed to strong adoption as customers scale their digital operations and AI use. The company also highlighted Scout 1.0, a specialized AI model for investigating production issues that powers its Bits Investigation tool, now in preview.

That AI halo cuts both ways: the enthusiasm that lifted the stock 61% this year set a bar a flat guide could not clear, making Wednesday's plunge the morning's standout software move.

What's next

The next test is execution against that fourth-quarter guide — and whether the flat outlook proves conservative or the start of a slower phase. Investors will also watch whether large-customer growth keeps expanding and whether AI monitoring products lift spending per customer. For now, the market's message is clear: the quarter was good, but at this valuation, good was not enough. This article reports what happened and why markets reacted; it is not a recommendation to buy, sell, or hold any security.

Sources

FAQ

Why did Datadog stock fall if earnings beat estimates?

Datadog beat on both earnings ($0.81 vs. $0.64 expected) and revenue ($1.20 billion vs. $1.146 billion), but its fourth-quarter revenue guidance of $1.19–$1.20 billion came in just below expectations and implied flat sequential growth, which disappointed investors in a stock that had risen 61% in 2026.

How much did Datadog stock fall on November 4, 2026?

Shares dived about 19% to around $179 in early trading, gapping below the stock's 200-day moving average and ranking among the session's biggest decliners.

What did Datadog guide for the full year 2026?

Management expects full-year revenue of $4.515 billion to $4.525 billion, non-GAAP operating income of $1.095 billion to $1.105 billion, and adjusted earnings of $2.73 to $2.75 per share.

What does Datadog do?

Datadog provides an observability and security platform that helps developers and IT departments monitor cloud infrastructure, applications, and increasingly AI systems, selling largely to enterprise customers including about 4,860 accounts spending at least $100,000 a year.

Datadog Stock Plunges 19% Despite Beating Earnings — Flat Guidance Spooks Investors