This is the third straight day where the market is not pricing the quarter that was reported, but the one after it.
| Close | Change | |
|---|---|---|
| Nasdaq 100 ETF | 714.65 | -0.37% |
| S&P 500 ETF | 768.56 | -0.16% |
In dollars, per the ETFs tracking the indices.
The indices barely moved. Underneath them, stocks lost a fifth of their value in a day.
Datadog: 36% Growth, Minus 19%
Datadog sells cloud monitoring software. When a company runs its infrastructure in the cloud, Datadog is what shows it what is happening there: where something broke, what is slow, and what is costing money.
The quarter itself was very good:
| The quarter | A year ago | |
|---|---|---|
| Revenue | $1.12 billion | +36% |
| Customers at $100k ARR or more | about 4,720 | about 3,850 |
| Adjusted operating income | $257 million | 23% margin |
| Cash and marketable securities | $5.0 billion |
Then came the guide. For the third quarter Datadog expects revenue of $1.135 to $1.145 billion.
That is the entire story, and it reduces to one piece of arithmetic: the company just closed a quarter at $1.12 billion and guided the next one to roughly $1.14 billion at the midpoint. Under two percent of sequential growth, at a company that just grew 36% in a year.
The number worth knowing: $5 million. That is Datadog's GAAP operating income for the quarter, on $1.12 billion of revenue. A zero percent margin. On an adjusted basis operating income was $257 million, a 23% margin. The gap between the two, about $252 million, is largely stock-based compensation. It is a real expense that dilutes shareholders, even when no cash leaves the building.
Why does this keep repeating this week? Yesterday SolarEdge and Taboola crashed for exactly the same reason, and there too the quarter was good and the guide was weaker than it. Three days, one pattern: investors are no longer paying for what happened, and are starting to pay for what will.
The Israeli Names: Two Crashes and Two Jumps
| Company | Close | Change |
|---|---|---|
| Teads (formerly Outbrain) | 0.70 | -15.84% |
| Playtika | 3.29 | -15.42% |
| Nova | 381.32 | -5.23% |
| NICE | 97.11 | -2.25% |
| Gilat | 11.29 | -2.84% |
| SolarEdge | 32.67 | -3.63% |
| ICL | 5.27 | +0.76% |
| Innoviz | 0.41 | +2.14% |
| Taboola | 4.04 | +5.35% |
| Tower | 224.70 | +6.42% |
| Arbe Robotics | 0.76 | +7.20% |
| Ormat | 107.38 | +9.55% |
| Real Brokerage | 1.99 | +15.03% |
| Unity | 40.81 | +15.05% |
The Israeli day split completely. Playtika and Teads lost about a sixth of their value, and on the same day Unity and Real Brokerage rose 15%.
Nova fell 5.23% even though it sits in exactly the right place: it sells metrology systems, meaning measurement and process control, to chip fabs. Every capacity expansion runs through equipment like this.
And Tower rose 6.42%, two days after falling 11.85%.
Our Pieces From Today
| Company | Close | Change |
|---|---|---|
| Eli Lilly | 1,191.94 | +1.89% |
| Disney | 104.68 | +2.87% |
| GlobalFoundries | 50.36 | +1.82% |
| ICL | 5.27 | +0.76% |
| IonQ | 39.72 | -0.53% |
| Hut 8 | 90.65 | -2.27% |
| NICE | 97.11 | -2.25% |
| CVS | 96.22 | -2.93% |
| Constellation Energy | 261.10 | -1.52% |
| Iron Mountain | 121.96 | -4.07% |
| D-Wave | 19.41 | -9.28% |
| Western Digital | 451.52 | -13.03% |
| Axon | 522.46 | -14.28% |
| Arbe Robotics | 0.76 | +7.20% |
| Ormat | 107.38 | +9.55% |
Axon and Western Digital were the biggest fallers among our pieces, and both were reacting to reports published after last night's close.
Other Notable Moves
| Company | Close | Change |
|---|---|---|
| Iovance Biotherapeutics | 6.21 | +43.09% |
| Aspen Aerogels | 6.89 | +37.52% |
| Insmed | 132.55 | +33.86% |
| Guerrilla RF | 3.50 | +29.73% |
| Hertz | 2.02 | +29.49% |
| Marriott Vacations | 124.75 | +22.62% |
| GigaCloud | 52.40 | +13.32% |
| BlackSky | 27.79 | +10.37% |
| ATI | 223.43 | +8.93% |
| US Foods | 106.97 | +6.45% |
| Cheniere Energy | 265.77 | +4.32% |
| Zoetis | 77.27 | +3.87% |
| Targa Resources | 268.23 | +3.12% |
| ConocoPhillips | 116.76 | +1.50% |
| Warner Bros Discovery | 26.40 | +1.66% |
| Fiserv | 54.11 | 0.00% |
| Primoris | 80.22 | -3.81% |
| Curtiss-Wright | 714.04 | -4.59% |
| Genius Sports | 7.83 | -6.00% |
| Viatris | 16.29 | -7.71% |
| Warby Parker | 26.96 | -7.89% |
| Planet Fitness | 51.21 | -9.51% |
| Six Flags | 15.75 | -16.00% |
| Papa Johns | 24.64 | -17.18% |
| Celsius | 23.77 | -18.46% |
| Datadog | 229.29 | -19.03% |
| TripAdvisor | 10.42 | -25.52% |
| UWM Holdings | 1.20 | -34.78% |
Who Reported Today
Reported before the open, and the reaction is already in the price: Datadog, ConocoPhillips, Cheniere Energy, Zoetis, Fiserv, Warner Bros Discovery, Targa Resources, Howmet Aerospace, Brookfield, Restaurant Brands, Constellation Energy, Insmed, Celsius, Hertz, TripAdvisor, Planet Fitness, Papa Johns, Six Flags, US Foods, Viatris, BCE, Bentley Systems, ATI, Curtiss-Wright, Lamar, Marriott Vacations, UWM, Warby Parker, D-Wave, Nova, Playtika, Payoneer, Unity, Teads, Via, Real Brokerage, MIND CTI, Arbe Robotics, Iovance, Aspen Aerogels, Intellia, Novavax, GigaCloud, BlackSky, Globalstar, Genius Sports, Guerrilla RF, TTM Technologies, Himax, Evergy, MDU, Primoris.
Reported after the close, and the reaction lands tomorrow: MARA, Cloudflare, Trade Desk, Twilio, Lyft, Instacart, Dropbox, Rigetti Computing, nLIGHT, JFrog, MicroVision, indie Semiconductor, PDF Solutions, Silvaco, Natera, Aflac, Dentsply Sirona, QuidelOrtho, ICU Medical, Rocket Companies, WillScot, Texas Roadhouse, Five9, Yelp, Sweetgreen, FIGS, Grindr, PubMatic, Sprout Social, Blink Charging, Serve Robotics, Arlo, AvePoint, 10x Genomics, Denali, Prothena, Century Aluminum.
This is a filtered list. More than 270 reports were filed on this day. We brought the names that are in the headlines, at the centre of attention, or on one of the threads we follow.
Tomorrow
Friday, 7 August. The reaction to the after-close reporters, led by Cloudflare, MARA, Trade Desk and Rigetti.
הזווית שלי
דעה אישית של אילן אברמוב - לא ייעוץ ולא המלצה
Three straight days, exactly the same pattern - and that is no longer coincidence.
SolarEdge crashed 30% after a good quarter. Taboola crashed 27% after raising guidance. And today Datadog fell 19% after growing 36%. In all three the reported quarter was perfectly fine, and in all three the guide for the next quarter was weaker than it.
What I take from this is not about any of the three individually. It is about what the market is pricing now. When a stock trades at a high multiple, that multiple is a bet on pace. The moment the pace slows, the multiple stops being justified, even if the company itself did nothing wrong.
Datadog did not lose customers. It added 870 large customers in a year. It simply said the next quarter would look like this one rather than much bigger than it. That was enough.
And for anyone holding growth stocks, this is the reminder: you are not holding a company, you are holding an expectation about pace. And pace is the first thing that breaks.
