- Datadog jumped 15% on Thursday to close at a record $132.47.
- The cloud software company reported better-than-expected results, leading analysts to conclude that it's picking up market share.
- Other cloud stocks with the highest multiples to sales also rose to record highs on Thursday.
The highest-valued cloud stocks have been on a tear of late and just got a further boost from data analytics and monitoring company Datadog, whose results blew past analysts' estimates.
Datadog shares jumped 15% on Thursday to close at a record $132.47. Heading into the day, Datadog traded for about 32 times revenue over the next year, making it one of the eight priciest cloud stocks by that metric, according to the Bessemer Venture Partners Cloud Index.
Of the nine stock that trade at 30 times forward sales, Datadog and four others closed at all-time highs on Thursday.
Bill.com, a financial software vendor, rose 1.4% to $208.92. Asana, which sells collaboration software, jumped 7.1% to $78.10, bringing its gain for the year to 164%. Security software provider Cloudflare rose 1.2% to $121.46. Atlassian, which sells popular developer tools, rose less than 1% to $343.43 and has surged 28% since announcing quarterly results a week ago.
Confluent, the cloud data analytics vendor that spun out of LinkedIn in 2014, jumped 6.8% in extended trading on Thursday. In its first earnings report since going public in June, Confluent said second-quarter revenue jumped 64% to $88 million.
While cloud stocks got off to a slow start to the year after a historic rally in 2020, they've rebounded of late and have been particularly strong now that investors are seeing their latest results.
The fastest-growth cloud companies that command the highest price premiums are outperforming the broader cloud index, which is weighed down by businesses that are struggling to expand. Yext, for example, is down 17% for the year, and security company Qualys has dropped 14%.
Datadog said on Thursday that second-quarter revenue jumped 67% to $233.5 million, topping the average analyst estimate of $212.5 million, according to StreetAccount. The company also raised its guidance for full-year revenue and profitability.
Analysts at Stifel increased their price target on the stock to $160 from $100 and said the company is gaining market share and should be able to sustain 40% growth even after Covid-19 because of the continued shift to the cloud.
"Overall, we continue to believe Datadog is the single best derivative way for investors to gain 'direct' exposure to the explosive growth within the hyperscale cloud market," the analysts wrote, after the earnings report.
The results were reminiscent of Atlassian's earnings report a week ago, when the company said revenue climbed 30% to $559.5 million, beating analysts' estimates by about $35 million. Atlassian shares jumped 22% following the report and have risen in three of the four days since.