Shares of Datadog (DDOG) slipped as the market reacted to news that the cloud monitoring firm is exploring a potential acquisition of GitLab (GTLB). Investors are weighing the costs and risks of the deal, leaving some uncertainty around the stock’s near-term performance. DDOG stock fell 5.53% on Thursday and declined an additional 2% in pre-market trading on Friday. In contrast, GTLB stock surged 10.6% on Thursday but but slipped over 3% in pre-market hours.
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Datadog is a cloud-based monitoring and analytics platform that enables businesses to track the performance of applications, infrastructure, and logs in real time. Meanwhile, GitLab is an online platform that helps teams build, manage, and update software.
Datadog Considers Buying GitLab
Market reports, first highlighted by StreetInsider, suggest a potential Datadog offer for GitLab at over $60 per share, representing a significant premium. Investors reacted enthusiastically, driving trading volume to roughly 19 million shares, about seven times the typical daily average.
The rumors indicate that Datadog sees strategic value in GitLab’s all-in-one DevSecOps platform, potentially combining cloud monitoring with software development tools. So far, neither company has commented, and no agreement has been confirmed.
This isn’t the first time GitLab has attracted acquisition attention. In July 2024, Reuters reported that the company was exploring a sale, with multiple tech firms, including Datadog, expressing interest. Notably, analysts have long viewed GitLab as an appealing target in the DevOps space. Needham’s five-star-rated analyst Mike Cikos noted that buyers like Amazon’s (AMZN) AWS or Alphabet’s (GOOGL) Google Cloud were expected, though a tie-up with Datadog could also make strategic sense.
Overall, the renewed 2025 takeover rumors show that the software development tools market is still seeing consolidation, as companies look to grow their AI-powered DevOps services.
Is Datadog a Buy or Hold?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on DDOG stock based on 28 Buys and five Holds assigned in the past three months. The average Datadog stock price target of $164.93 per share implies a 9.10% upside potential.
Year-to-date, DDOG stock has gained 5.8%.
