Data analytics company Datadog Inc. (NASDAQ: DDOG) will hold a virtual investor meeting on Wednesday as part of its annual user conference.
Previously, the DDOG stock price has reacted positively to the event, rallying 9% after last year’s meeting and 45% in the 10 weeks that followed. The rally was triggered by a wave of analyst upgrades driven by new products announced.
Should you bet on Datadog’s growth?
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From an investment perspective, Datadog shares trade at a steep forward P/E ratio of 405.97. Therefore, depending on the outcome of the virtual event on Wednesday, value investors could opt for alternatives in the market.
However, analysts are optimistic about Datadog’s growth prospects, forecasting its earnings per share to grow by 44.40% next year, before increasing at an average annual rate of 20.40%.
As a result, DDOG shares could gain the attention of long-term growth investors.
Therefore, although the stock seems significantly overvalued ahead of the investor meeting, it may not be too late to buy.
A pullback seems inevitable
Technically, Datadog shares seem to have skyrocketed to trade closer to the trendline resistance of the 100-day moving average. As a result, the stock has surged to the overbought conditions of the 14-day RSI.
Therefore, a pullback could be imminent. Investors may target downward profits at about $151.49, or lower at $138.00, ahead of the virtual meeting. However, if the stock completes a channel breakout, it could find resistance at about $176.17, or higher at $189.29.
Datadog looks like an exciting shorting opportunity
In summary, although Datadog offers exciting growth prospects, the stock seems to have recently skyrocketed to overbought conditions, creating a perfect opportunity for a pullback.
Therefore, given the company’s steep valuation of 405.97 forward P/E, it could be time to take some profits. As a result, the stock could experience more short trades before bouncing back to extend the rally.
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