DDOG Approaches Earnings With Shorts Rebuilding and Borrow Still Cheap

Datadog heads into its November 4 earnings print with short positions quietly growing, insider sales on the books, and the stock sitting near all-time highs above $280.

The lending market is the most relaxed it has been all year, which makes the short interest rebuild worth noting on its own terms. Availability remains essentially unlimited: more than 330 million shares are available to borrow against roughly 10 million currently shorted, a ratio so loose it barely registers as a constraint. Borrow costs reflect that comfort, with cost to borrow at just 0.36%, near the bottom of its 30-day range despite a 62% rise over that period from an even lower base. The build in short interest is therefore a deliberate choice rather than a function of tight supply. Shorts grew roughly 2% over the past week and are up around 5.6% over 30 days, moving the position to 3.0% of the free float. That is modest in absolute terms but the direction of travel has shifted: in early October, short interest was declining; it has now rebuilt to levels not seen since late September. Options positioning is calm, with the put/call ratio at 0.85, just under one standard deviation above its 20-day average, short of anything alarming.

The Street, by contrast, is as constructive as it has been in some time. Analyst targets have moved sharply higher in October: Bernstein upgraded to Outperform and raised its target from $237 to $350 on October 19, Mizuho lifted its target to $330, and Barclays and RBC both nudged theirs higher. The consensus mean of $294 implies only modest upside from the current $280.82 close, but the freshest individual targets are clustered well above that figure. The bull case rests on 36% revenue growth, 80% gross margins, and rising AI-native demand across the platform. The bear case centres on a Q3 revenue guide implying deceleration to 28 to 29% growth, questions about monetising AI workloads, and competitive pressure in hybrid environments. Factor scores show strong forward earnings momentum, with the 12-month forward EPS growth rank at the 85th percentile and analyst recommendation differential at 99th. The valuation is unambiguously rich: PE near 97x and EV/EBITDA around 71x, with the EV/EBIT factor score ranking at just the 1st percentile, meaning the stock is among the most expensive in its universe on that measure.

Co-founder and CTO Alexis Le-Quoc sold roughly 52,000 shares across multiple tranches on October 7, filing values totalling approximately $13.5 million. All sales were executed under a pre-arranged 10b5-1 plan, which reduces their signal value as a read on near-term conviction. Over the past 90 days, net insider activity amounts to approximately -132,000 shares and -$33.9 million. Le-Quoc remains a top-10 holder with 8.4 million shares, so these are plan-driven disposals rather than a strategic reduction in exposure. Institutional holders are broadly adding: FMR increased its position by nearly 6 million shares in the period to September 30, and T. Rowe Price added 3.4 million over the same window. BlackRock and State Street also added modestly.

The most striking data point coming into this week is the earnings history. The last reported result, on August 6, sent the stock down 17.4% the following day and a further 10.9% over five days. That reaction came despite revenue beating consensus by roughly 4%. The market punished the guidance cut implied in the Q3 revenue range, and that dynamic is directly relevant to the November 4 print: with several fresh analyst targets well above $300 and the stock near $281, the bar is set by expectations, not just by reported numbers.

Peers have broadly moved with DDOG this week. CRWD gained 17.9% and PANW rose 18.0%, both outpacing DDOG's 9.5% gain. FTNT added 8.2% and FROG 8.8%, suggesting the sector-wide move was broad and DDOG's relative performance was solid but not exceptional. The key variable heading into November 4 is whether the revenue guidance range for Q4 confirms the deceleration implied by the August update, or resets expectations in the other direction.