TLDR
- Datadog shares surged 10% after S&P Global announced the company will join the S&P 500 index effective July 9, 2025
- The monitoring software provider will replace Juniper Networks following HPE’s $13.4 billion acquisition of Juniper
- Datadog reported $24.6 million in net income on $761.6 million in revenue for Q1 2025 with a customer base of 30,500
- The stock had been down 5.5% year-to-date before the announcement, underperforming the broader tech sector
- Wall Street maintains a Strong Buy rating with an average price target of $140.02, implying 3.7% upside potential
Datadog stock rocketed 10% in extended trading Wednesday after S&P Global announced the cloud monitoring company will join the prestigious S&P 500 index. The change takes effect before market open on July 9, 2025.
The New York-based company will replace Juniper Networks in the index. This spot opened up after Hewlett Packard Enterprise completed its $13.4 billion acquisition of Juniper on July 2.
HPE disclosed the purchase price in a filing with regulators. The computer server maker had been working on this deal for months.
The two companies reached a settlement with the U.S. Justice Department over the weekend. The DOJ had sued to block the merger initially.
As part of the settlement, HPE agreed to sell off its global Instant On campus and branch business. This cleared the regulatory hurdle for the acquisition.
Index Inclusion Drives Demand
Stock prices typically rally when companies join major indexes. Fund managers must rebalance their portfolios to match the index composition.
Passive funds and ETFs that track the S&P 500 will be required to buy Datadog shares. This automatic buying pressure often pushes prices higher.
The tech sector continues to expand its presence in the S&P 500. DoorDash joined during the last rebalancing in March 2025.
Cloud software vendor Workday was added in December 2024. Earlier additions in 2024 included Palantir, Dell, CrowdStrike, GoDaddy and Super Micro Computer.
Financial Performance Shows Growth
Datadog went public in 2019 and has built a profitable business model. The company generated $24.6 million in net income during the first quarter of 2025.
Revenue reached $761.6 million in Q1 2025. The company’s customer base has grown to 30,500 customers, according to Main Street Data.
Datadog just joined the S&P 500.
A rock-solid SaaS business used by half the Fortune 500, growing consistently 👌$DDOG +8% AH pic.twitter.com/bPVn2WQ54w
— Investing with Aria (@QualityInvest5) July 2, 2025
The latest earnings call highlighted strong customer growth and increased product usage. Artificial intelligence integrations have contributed to this expansion.
Datadog provides monitoring and analytics solutions for businesses. The platform helps companies track application and infrastructure performance, including servers, security and databases.
The company competes with Cisco, which acquired Splunk last year. Other competitors include Elastic and cloud infrastructure providers like Amazon and Microsoft.
Stock Performance Lags Tech Sector
Datadog had underperformed the broader tech sector before Wednesday’s jump. The stock was down 5.5% year-to-date as of Wednesday’s close.
This compared poorly to the Nasdaq Composite, which was up 5.6% over the same period. The company’s market cap stands at $46.6 billion.
Despite the recent underperformance, Datadog’s valuation remains higher than the median company on the Nasdaq Composite index. The stock trades at premium levels compared to many tech peers.
Wall Street analysts remain optimistic about the company’s prospects. On TipRanks, Datadog has a Strong Buy consensus rating based on 28 Buy ratings and five Hold ratings.
The average price target of $140.02 implies 3.7% upside potential from current levels. This suggests analysts see room for further gains beyond the S&P 500 inclusion bounce.
Other companies had been waiting for S&P 500 inclusion. Trading platform Robinhood Markets and AdTech firm AppLovin will have to wait their turn for index membership.
Shares are up 10.5% in pre-market trading at the time of writing, extending Wednesday’s after-hours gains.
Stay Ahead of the Market with Benzinga Pro!
Want to trade like a pro? Benzinga Pro gives you the edge you need in today's fast-paced markets. Get real-time news, exclusive insights, and powerful tools trusted by professional traders:
- Breaking market-moving stories before they hit mainstream media
- Live audio squawk for hands-free market updates
- Advanced stock scanner to spot promising trades
- Expert trade ideas and on-demand support
