- Curious if Datadog is a good deal right now? You’re not alone, and sizing up its value is more important than ever for anyone eyeing high-growth tech stocks.
- After climbing 26.0% over the past year and notching an impressive 123.5% return in three years, Datadog’s share price momentum has got investors talking about both opportunity and risk.
- Recent headlines have focused on Datadog’s product launches and new strategic partnerships, spotlighting its ongoing gains in the observability and cloud infrastructure sectors. This positive attention has added fuel to discussions about where the company’s true value lies.
- Right now, Datadog scores a 2 out of 6 on our valuation checks, which suggests there is some debate about how cheap or expensive it is. Below, we break down common approaches to judging value, followed by a smarter way to see the bigger picture.
Datadog scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.
Approach 1: Datadog Discounted Cash Flow (DCF) Analysis
A Discounted Cash Flow (DCF) model estimates a company’s intrinsic value by projecting its expected future cash flows and discounting them back to today’s dollars. This approach gives investors a way to judge whether a stock is currently under or overvalued compared to its fundamentals.
For Datadog, the latest available Free Cash Flow is $860.5 Million. Analyst estimates suggest significant growth, with Free Cash Flow projected to reach about $2.8 Billion by 2029. It is worth noting that analysts typically provide projections for the next five years, and any further forecasts are extrapolated using established methods.
Based on the DCF valuation, Datadog’s estimated intrinsic value is $201.25 per share. At current prices, this represents a 21.7% discount, indicating that the stock may be undervalued compared to where its future cash generation potential stands today.
This suggests that, if current forecasts are correct, Datadog could offer notable upside for investors who are willing to look past short-term swings and focus on the company’s longer-term prospects.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests Datadog is undervalued by 21.7%. Track this in your watchlist or portfolio, or discover 840 more undervalued stocks based on cash flows.
DDOG Discounted Cash Flow as at Nov 2025
Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Datadog.
Approach 2: Datadog Price vs Sales
The Price-to-Sales (P/S) ratio is a preferred valuation metric for fast-growing technology companies like Datadog, especially when profitability is still developing. It provides a snapshot of how much investors are currently willing to pay for every dollar of the company’s sales, making it particularly useful for high-growth firms where earnings may not fully reflect business momentum yet.
Growth expectations and perceived risk both play huge roles in what counts as a “normal” or “fair” P/S ratio. Companies with rapid revenue growth typically command higher multiples if investors believe those trends will persist. However, the higher the risk, the lower investors tend to price those sales relative to safer or more established peers.
Datadog currently trades at a P/S multiple of 18.2x, which is significantly above the Software industry average of 5.1x and the peer group average of 7.7x. This premium signals that investors have high expectations for Datadog’s ongoing growth and market share gains.
Rather than just using industry or peer averages, Simply Wall St uses a proprietary “Fair Ratio” metric to estimate what a justified P/S should be for Datadog. This incorporates the company’s growth rate, risk profile, profit margin, size, and sector context, giving a more tailored sense of fair value. In Datadog’s case, the Fair Ratio stands at 14.7x.
Since Datadog’s actual P/S ratio of 18.2x is higher than its Fair Ratio, this suggests the stock is trading above what would be justified by its fundamentals alone, which could mean the shares are overvalued at current levels.
Result: OVERVALUED
NasdaqGS:DDOG PS Ratio as at Nov 2025
PS ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1410 companies where insiders are betting big on explosive growth.
Upgrade Your Decision Making: Choose your Datadog Narrative
Earlier, we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is your investment story, bringing together your perspective on Datadog’s future revenue, earnings, margins, growth, and fair value, all in a way that connects the numbers with a real-world outlook. Narratives let investors link what’s happening in the business (for example, cloud adoption or AI-driven change) directly to a financial forecast and a resulting fair value, creating a bridge between your beliefs and actionable investment signals.
Simply Wall St’s platform makes Narratives accessible for all users, offering a dedicated Community page where millions of investors can easily create, view, and update their own Datadog stories. Narratives help you decide whether to buy, hold, or sell, by comparing your Fair Value (shaped by your assumptions) with the actual market Price, so your decisions reflect what you believe, not just what consensus says.
Importantly, Narratives are dynamic: they automatically update when new information like earnings reports, news, or analyst forecasts become available, so your story always evolves with the business. For example, some investors on Simply Wall St see Datadog’s fair value as high as $200 per share, focusing on major AI-driven growth, while others take a more cautious view around $105, emphasizing risks from competition and customer concentration. This means there is room for you to define your own informed perspective.
Do you think there’s more to the story for Datadog? Head over to our Community to see what others are saying!
NasdaqGS:DDOG Community Fair Values as at Nov 2025
This article by Simply Wall St is general in nature. We provide commentary based on historical data
and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your
financial situation. We aim to bring you long-term focused analysis driven by fundamental data.
Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
Simply Wall St has no position in any stocks mentioned.
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