Shares of Datadog (DDOG) soared 10.9% in after-hours trading yesterday and are up 10.5% in pre-market trading at the time of writing. Investors are reacting positively to S&P Global’s decision to include the company in the S&P 500 index (SPX). The change is expected to take effect before the market opens on Wednesday, July 9.
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A company’s inclusion in the SPX index brings a significant change to its stock’s trajectory. Hedge funds, Exchange-Traded Funds (ETFs), and all passive funds that track the S&P 500’s performance are required to add shares of all SPX companies to their portfolios, thus increasing the demand for the company’s common shares.
Datadog Will Replace Juniper Networks
According to the announcement, Datadog will replace Juniper Networks in the index. Computer hardware company Hewlett Packard Enterprise (HPE) completed its long-pending acquisition of Juniper on July 2. HPE, which is also a constituent of the S&P 500 index, paid a massive $13.4 billion for the acquisition. This action removed Juniper’s stock from the index, making a spot available for Datadog.
A company must fulfill certain criteria to be eligible for inclusion in the SPX. Datadog has proven its worth with a successful business model and a growing market capitalization. Datadog provides monitoring and analytics solutions that help businesses track the performance of their applications and infrastructure, including servers, security, and databases.
Key KPI Insights from Main Street Data
According to data compiled by Main Street Data, Datadog’s customer base has consistently expanded, reaching 30,500 by Q1 2025, driven by strong product adoption and strategic acquisitions. The latest earnings call highlighted robust customer growth and increased product usage, with significant contributions from artificial intelligence (AI) integrations.
Robinhood, Applovin Will Have to Wait Their Turn
The news about Datadog joining the SPX means that trading platform Robinhood Markets (HOOD) and AdTech firm AppLovin (APP) will still have to wait their turn. There was high expectation of Robinhood joining the index this June, when the S&P typically rebalances its indices. The news led to marginal declines in the stock prices of both companies.
Is Datadog Stock a Good Buy?
Wall Street remains highly optimistic about Datadog’s long-term stock outlook. On TipRanks, DDOG stock has a Strong Buy consensus rating based on 28 Buys and five Hold ratings. Also, the average Datadog price target of $140.02 implies 3.7% upside potential from current levels. Year-to-date, DDOG stock has lost 5.5%.
