May was a wild month for many different reasons, but when it comes to investing, it was also the time for some of the market's more intriguing tech stocks to shine. Shares of Twilio (TWLO -2.85%), DraftKings (DKNG -1.38%), and Datadog (DDOG -2.70%) soared at least 50% in May.
You're feeling pretty good if you owned at least one of them over the past month, and you're kicking yourself if not. Let's go over what attracted investors to Twilio, DraftKings, and Datadog in May.
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Twilio: Up 76% in May
We're living out of our phones these days, and that's been a feast for Twilio as the leading provider of in-app communications solutions. Twilio toils away behind the scenes of some of your most popular apps. Twilio is the way your Airbnb host confirms your villa reservation request and the platform that allows your restaurant delivery app driver to let you know that your chicken and waffles have arrived. Two weeks ago, when New York City announced plans for its COVID-19 contact tracing, it tapped Twilio to handle the new app's communications features.
It also helps that Twilio kicked off the month with a monster financial update. Revenue soared 57% for the first quarter, beating expectations. It also squeezed out a small profit on an adjusted basis, a welcome surprise for Wall Street pros modeling a quarterly deficit. Twilio's dollar-based net expansion rate -- a big metric for cloud-based service providers that measures how much returning customers are spending now versus a year earlier -- widened to a jaw-dropping 143%.
DraftKings: Up 104% in May
Sometimes what appears to be a case of bad timing happens to be the perfect buying opportunity. DraftKings hit the market as a reverse merger in late April, and it seemed unfortunate timing at first. DraftKings is a leader in fantasy sports betting online, and that's not much of a business when real sporting contests aren't taking place. There's also the DraftKings Sportsbook platform for more traditional betting in areas where that's legal, but again, the game's not exactly afoot these days.
DraftKings didn't generate a lot of buzz in its first few days of trading near the end of April, given the chilly climate for live sports, but the stock more than doubled last month. It didn't hurt that it posted its first financial results as a public company in mid-May. Its operating and net loss more than doubled for the quarter, but revenue did climb 30% to $88.5 million for the first three months of the year. This came as a relief to investors, as it's a figure that would've been substantially higher if the NBA, NHL, and international soccer leagues hadn't hung up their shoes, skates, and cleats in March.
Real games outside of downhill marble races are hard to find these days, but U.S. leagues are negotiating ways to get their seasons back up and running. Investor interest is picking up for this well-positioned vertically integrated play on the online gaming market that's still in the early innings in this country, and shareholders are betting on DraftKings.
Datadog: Up 58% in May
Twilio isn't the only stock turning cloud computing into sky-high gains. Datadog offers cloud monitoring and analytics tools, a pretty big deal for companies including DraftKings. When you're processing up to a million fantasy football transactions a minute on an NFL Sunday, you can't afford to let your website go down, and that's why DraftKings turns to Datadog to keep tabs on its platform's uptime.
Datadog also had a better-than-expected quarter last month. Revenue accelerated, clocking in 87% higher than the same period a year earlier. Like Twilio, it posted a small profit when analysts were bracing for red ink. It was a strong performance, and Datadog boosted its revenue guidance for the full year in the process. Add it all up, and between Twilio, DraftKings, and Datadog, May was a great month for the right tech stocks.
