Datadog Reportedly Explores GitLab Takeover Above $60 Per Share
Datadog is working with investment bank Morgan Stanley to explore a potential takeover bid for GitLab, with reports suggesting a possible offer of over $60 per share. The move signals a potential major consolidation in the DevOps and observability software market, placing Datadog in an aggressive strategic position as it looks to expand its platform capabilities and market share.
Rival's Acquisition Triggers Analyst Caution Despite Strong Q3
While Datadog pursues expansion, a rival's deal has prompted fresh concerns about competition and pricing. Palo Alto Networks' planned acquisition of Chronosphere has caused some analysts to temper their outlook. Citi, while maintaining a Buy rating, cut its price target on Datadog from $230 to $200, citing a "narrative overhang" from the deal. Truist took a more cautious stance, slashing its price target to $140 from $195. These concerns persist even after Datadog delivered strong Q3 results, with revenue of $886 million beating prior guidance. Bulls at firms like RBC Capital and Jefferies highlight the solid execution and the recent contract renewal with a key AI-native customer, believed to be OpenAI, as evidence of sustained demand.
Fair Value Trimmed to $208.49 as Market Weighs Growth Against Risk
The conflicting market forces are reflected in a slight adjustment to Datadog's modeled valuation. Its fair value estimate was trimmed from approximately $211.97 to $208.49 per share. This adjustment was primarily driven by an increase in the discount rate from 8.47% to 8.50% and a reduction in the future P/E ratio assumption from 150.23x to 144.83x. The company itself issued optimistic guidance for Q4 2025 revenue of $912 million to $916 million and full-year 2025 revenue between $3.386 billion and $3.390 billion, projecting continued growth.
