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Nothing's Stopping These 2 Nasdaq Winners After Earnings

By Dan Caplinger – Aug 5, 2021 at 1:07PM

Key Points

  • The Nasdaq moved higher on Thursday.
  • Earnings played a key role in the positive tone of the market.
  • Two Nasdaq stocks jumped more than 10% each and have potential for further gains in the future.

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Big gains for these two rising stars helped lift the entire market.

Earnings reports are coming fast and furious right now, and what investors are seeing is driving market action. Although there's a mix of positive and negative reports across the market, those watching had a generally favorable view of how companies are doing, and that helped send the Nasdaq Composite (^IXIC) up more than half a percent as of noon EDT.

Two companies that did a great job of impressing their shareholders were Latin American e-commerce giant MercadoLibre (MELI -3.18%) and cloud-based data analytics specialist Datadog (DDOG -1.83%). Both companies saw their stocks soar Thursday, and below, we'll look at what they said in their earnings reports that made investors so pleased.

MercadoLibre heats up

Shares of MercadoLibre soared 13% Thursday morning. The e-commerce specialist's second-quarter financial results included promising news about the resilience of the Latin American economy and MercadoLibre's ability to tap into growth trends there.

A lot of good things happened with MercadoLibre during the quarter. Gross merchandise volume was up nearly 40% year over year to $7 billion, with active users climbing 47% to 75.9 million and items sold hitting 245 million, up 37%. Total payment volume on the company's Mercado Pago electronic payment system topped the $17.5 billion mark, up 56%, on an 80% rise in total payment transactions to 730 million. More than 70% of that payment volume took place off-network, showing that Mercado Pago is gaining strength in its own right, independent of MercadoLibre's e-commerce marketplace.

Person in home with laptop and smartphone.

Image source: Getty Images.

That success translated into strong financial performance. Revenue soared 94% to $1.7 billion, with commerce revenue nearly doubling and big boosts in fintech-related sales as well. Net income rose 22% from the year-ago quarter.

As in other parts of the world, the COVID-19 pandemic has forced businesses to pivot to e-commerce channels. MercadoLibre has benefited from that, and even an economic reopening won't stop people from taking advantage of the convenience of online retail going forward.

Datadog is an investor's best friend

Meanwhile, shares of Datadog rose nearly 14%. Investors reacted favorably to continued growth in the company's second-quarter financial report.

Datadog saw revenue move higher by 67% from year-ago levels, powered by the cloud monitoring platform provider signing up almost 600 new customers over the past year that generate $100,000 or more in annual recurring revenue. Adjusted earnings came in at $0.09 per share, and Datadog got a big lift from the launch of its cloud security platform to add breadth to its previous offerings.

Investors were also pleased about what Datadog sees coming down the road for the remainder of the year. The company expects revenue of between $246 million and $248 million in the third quarter, with earnings of $0.05 to $0.06 per share. For the full year, Datadog provided guidance for sales of between $938 million and $944 million and earnings of $0.26 to $0.28 per share.

Companies around the world have gone through massive digital transformation efforts, and Datadog has been an essential tool in building out technology capabilities. Although the pandemic definitely gave cloud adoption a boost, Datadog is showing that clients remain convinced of the long-term value of taking full advantage of cutting-edge tech to the greatest extent possible.

Dan Caplinger owns shares of Datadog and MercadoLibre. The Motley Fool owns shares of and recommends Datadog and MercadoLibre. The Motley Fool has a disclosure policy.

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Stocks Mentioned

MercadoLibre Stock Quote
$921.34 (-3.18%) $-30.23
NASDAQ Composite Index (Price Return) Stock Quote
NASDAQ Composite Index (Price Return)
$11,226.36 (%)
Datadog Stock Quote
$73.47 (-1.83%) $-1.37

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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