Datadog reports Q1 2026 results today with the stock riding its strongest month in recent memory — yet short sellers have been quietly building positions into the strength.
The most notable tension heading into this print is the divergence between price momentum and a rising short base. The stock has climbed 19% over the past month to $143.71, bouncing hard off April lows. Yet estimated short interest has risen more than 52% over the same period, reaching 4.1% of the free float. That is a meaningful pickup for a stock rallying aggressively. Borrow costs have also nearly doubled over the past week to 0.49%, suggesting fresh demand for short inventory. The lending market remains loose — availability is ample — so there is no squeeze pressure, but the directional bet against the name has grown at a notable pace. Options positioning, by contrast, is neutral: the put/call ratio of 0.91 is almost exactly in line with its 20-day average, implying no outsized hedging demand heading into the event.
The bull case rests on the growth trajectory. Forward EPS estimates rank in the 91st percentile for year-on-year growth, and the analyst community is firmly in the constructive camp — the analyst consensus differential ranks in the 94th percentile, and the mean price target of $177 implies roughly 23% upside from current levels. DA Davidson held its $225 target this week. Guggenheim upgraded to Buy in early April. The bear case, echoed across the Street, centres on whether Datadog can convert AI-driven telemetry growth into durable pricing power in a competitive observability market. Several analysts — including Barclays and Mizuho — trimmed targets in mid-April, keeping positive ratings but acknowledging that the macro environment compresses valuation tolerance. The PE multiple has re-rated sharply higher over the past month, now near 62x, which leaves little room for a revenue miss.
Institutional ownership tells a broadly supportive story. BlackRock added 1.1 million shares through April, and T. Rowe built its position by nearly one million shares in Q1. Insider activity is less encouraging: co-founder and CTO Alexis Le-Quoc sold roughly $5.6 million worth of stock on April 22, while director Amit Agarwal sold a further ~$2.6 million on April 27. Neither holding change is dramatic in percentage terms — Le-Quoc still holds over 2.5% of shares — but the timing, just days before the print, is worth noting. Past earnings reactions have been mixed: the stock rose about 1.8% on the day after Q4 results in late April, but fell nearly 3% and 2.8% on the two releases before that, with multi-day losses extending to 5–8%.
The print will test whether the strong monthly recovery reflects genuine confidence in the AI-driven revenue story, or simply broader risk-on positioning that a cautious guide could quickly unwind.
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