Datadog, an app performance monitoring and analytics platform, closes up 39% on its first day of trading, after raising $648M in an IPO at a $7.8B valuation
right now he's $60 million short, per @Forbes estimates. Stay tuned to see if he makes it: https://www.forbes.com/... Jonathan Lehr / @fendien : It's official. NYC Tech 1.0 was adtech (DoubleClick, AppNexus) NYC Tech 2.0 was media and ecomm (Gilt, Tumblr, Warby Parker) NYC Tech 3.0 is now cemented as an enterprise tech powerhouse 🔥🔥🔥 And all of us @Work_Bench couldn't be more excited Well done @datadoghq 👏👏👏 https://twitter.com/...
Context & Ripple Effects
Datadog's debut lands six weeks after fellow APM vendor Dynatrace closed up 49% on its first day of trading at a ~$6.7B valuation, giving public-market investors back-to-back proof that cloud-based application monitoring can price well above private marks. Its August IPO filing laid out the fundamentals behind the pop — revenue of $198M in 2018, doubled from $101M in 2017, against a modest $13M first-half 2019 loss — and Bloomberg reported the company got there by rejecting Cisco's acquisition offer.
The listing also carries a regional signal: Work-Bench's Jonathan Lehr framed the day as New York tech's third act, following adtech (DoubleClick, AppNexus) and media/e-commerce (Gilt, Tumblr, Warby Parker), with enterprise software now the city's anchor category.
First-order effects
- Datadog banks $648M of new capital at a $7.8B valuation — roughly 40x its 2018 revenue — converting its decision to stay independent rather than sell to Cisco into a public market cap within seven weeks.
- Employees and early backers get liquid stock priced at a premium to the last private round, while the underwriters' book clears at a near-40% first-day markup.
Second-order effects
- Dynatrace's August debut plus Datadog's sets a two-company public comp set for observability, forcing remaining private monitoring vendors to choose between racing to an IPO window or accepting acquirer terms below what the market now pays.
- New York's investor base gains a flagship enterprise-software listing to anchor future deals, shifting local capital and talent flows away from the adtech and consumer plays that defined the city's earlier cycles.
Third-order effects
- If the pattern holds, usage-based cloud infrastructure software becomes a durable public-market category that rewards hypergrowth even at a loss — a bet the corpus keeps validating, from the 2023 quarter's ~30% jump on a $547.5M beat through the 2026 print of $1B quarterly revenue and a raised full-year forecast.
- Independent monitoring platforms staying out of consolidation hands like Cisco's points toward an industry structure where observability leaders compound standalone rather than fold into hardware incumbents' portfolios.
The trend: Cloud-native observability is consolidating into a small set of independent public compounds whose quarterly prints — not acquisition offers — now set the sector's valuation floor.