DDOG heads into its June 15 earnings report with the Street broadly bullish after a blowout Q1, short sellers rebuilding positions at pace, and options traders turning measurably more defensive — a setup that is more charged than it first appears.
The most striking story in the data is how aggressively short sellers have added since the May 7 earnings print. SI % of FF climbed from roughly 3.1% in mid-April to 4.5% now — a near-50% increase in notional short exposure over six weeks. The post-earnings jump was particularly sharp: shorts added more than half a point of float exposure in the week following the Q1 release, suggesting this is a tactical re-short at elevated prices rather than a conviction bearish call. The ORTEX short score is a middling 36.9, reflecting moderate rather than extreme positioning, and with borrow costs at just 0.38% and availability sitting at an exceptionally loose 5,157% — more than 50 times the shares already borrowed remain available to lend — there is no structural squeeze pressure in the lending market. Shorts face no friction getting in or out.
Options positioning tells a subtly different story. The put/call ratio jumped to 0.946 on May 26, almost two standard deviations above its 20-day mean of 0.863, marking the most defensive read since late April. That's not extreme in absolute terms — the 52-week high is 2.30 — but the sharp single-session move up from the prior week's 0.838 is notable. With Q1 delivering a 39% single-day pop, options traders appear to be hedging a repeat in either direction.
The Street remains heavily constructive on DDOG, though not without dissent. After the Q1 beat, targets were raised across the board — Barclays to $215, RBC Capital to $219, UBS to $220, Scotiabank to $225, Macquarie to $230. This week BTIG added its voice, lifting its target to $255. The consensus mean price target now stands at $224.68, essentially in line with the current price of $223.65. Goldman Sachs is the notable holdout: it maintained a Sell rating while lifting its target from $121 to $139 on May 12, a significant 15% raise that still sits nearly $85 below the current price. The bull case centres on Datadog's AI-native observability moat, strong ARR growth and multi-product expansion. Bears worry about competitive pressure from cloud hyperscalers and the risk that elevated billings expectations embed too much optimism. At a P/E of 86 and EV/EBITDA of 64.5x, the stock is priced for continued execution — P/E has expanded by 29 points over the past 30 days alone, tracking the 73% one-month price surge. EPS momentum is strong, ranking in the 89th percentile on a 30-day basis and 79th on 90 days, which provides some fundamental support for the re-rating.
Founder CTO Alexis Le-Quoc sold approximately $8.6m worth of stock on May 18 across multiple transactions, trimming his holding by around 135,000 shares. That follows steady institutional accumulation: BlackRock added nearly 7m shares in its April filing, and Janus Henderson added 1.4m in Q1. Director Amit Agarwal sold a smaller ~$1.6m on May 11. The insider activity is selling-heavy at the individual level but the co-founder's position, still 2.47% of shares outstanding, remains substantial. Peer context supports the positive broader tape — CRWD gained 8.5% on the week and FTNT rose 5.9%, suggesting the cybersecurity and cloud infrastructure group moved in sympathy with DDOG's 4% weekly gain rather than diverging from it.
The next watch point is the June 15 earnings call. After a 39% day-one move in May, the bar is not low — the Q2 print will test whether the acceleration in net new ARR and AI-driven product adoption has continued, or whether the May surge has pulled forward more than one quarter of growth.
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