Datadog, Inc. (NASDAQ:DDOG) insiders who sold US$29m worth of stock earlier this year are probably glad they did so as market cap slides to US$38b

By
Simply Wall St
Published
March 16, 2022
NasdaqGS:DDOG
Source: Shutterstock

Insiders seem to have made the most of their holdings by selling US$29m worth of Datadog, Inc. (NASDAQ:DDOG) stock at an average sell price of US$175 during the past year. The company's market valuation decreased by US$1.9b after the stock price dropped 4.9% over the past week, but insiders were spared from painful losses.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.

Check out our latest analysis for Datadog

Datadog Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when the Lead Independent Director, Dev Ittycheria, sold US$23m worth of shares at a price of US$193 per share. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. The good news is that this large sale was at well above current price of US$121. So it may not shed much light on insider confidence at current levels.

Datadog insiders didn't buy any shares over the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

insider-trading-volume
NasdaqGS:DDOG Insider Trading Volume March 16th 2022

If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).

Insiders at Datadog Have Sold Stock Recently

Over the last three months, we've seen significant insider selling at Datadog. Specifically, insiders ditched US$1.4m worth of shares in that time, and we didn't record any purchases whatsoever. Overall this makes us a bit cautious, but it's not the be all and end all.

Insider Ownership of Datadog

For a common shareholder, it is worth checking how many shares are held by company insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It's great to see that Datadog insiders own 15% of the company, worth about US$5.5b. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

What Might The Insider Transactions At Datadog Tell Us?

Insiders sold stock recently, but they haven't been buying. And there weren't any purchases to give us comfort, over the last year. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. Be aware that Datadog is showing 5 warning signs in our investment analysis, and 1 of those shouldn't be ignored...

Of course Datadog may not be the best stock to buy. So you may wish to see this free collection of high quality companies.

For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions, but not derivative transactions.

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