DDOG
Datadog, Inc.
$277.22
High-Growth Software
80%
Revenue × Terminal Margin DCF
Strong
·
Conviction
Overvalued
Trading 142.7% above fair value
You pay
$277.22
Bear
$54.45
Fair
$114.24
Bull
$160.76
Bear
$54.45
-80.4%
18% rev growth, 20% terminal margin
Fair
$114.24
-58.8%
30% rev growth, 26% terminal margin
Bull
$160.76
-42.0%
35% rev growth, 30% terminal margin
Adjust Assumptions
30.0%
26.0%
12.0%
Key Value Driver
Revenue growth (30%) × margin expansion to 26%
Terminal Value % of EV
57%
Implied Market Multiple
27.9x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (48 analysts)
$276.10
Divergence from AlphaVal
59%
Summary
Projecting 30% revenue growth with FCF margins expanding from 29% to 26% over 10 years, discounted at 12%, the base-case value is $114.24 per share.
Warnings
Stock-based employee pay is 22% of revenue — your ownership shrinks by about 2.0% each year as new shares are issued. Our estimate already accounts for this dilution.
Gross margin of 80% means each dollar of revenue is highly profitable. As the company grows, overhead costs should shrink as a share of revenue, boosting overall profits.
Wall Street's average price target is $276.10 (from 48 analysts). Our estimate is 59% below the consensus -- consider that gap carefully.
Key Risks
- Current FCF misleads — the model values future margins, not today's cash
- SBC dilution is the hidden tax: 2-4% annual share growth compounds fast
- Revenue deceleration is inevitable — the question is when and how steep