Why Datadog, MongoDB, and Twilio Surged This Week
Shares of enterprise software companies Datadog (NASDAQ: DDOG), MongoDB (NASDAQ: MDB), and Twilio (NYSE: TWLO) rallied this week, up 25.5%, 21.4%, and 18% on the week through Friday, respectively.
There wasn't much in the way of company-specific news this week. However, each is a very high-growth stock, with much of its earnings far out into the future. Thus, they are extremely sensitive to long-term interest rates. After six months of long-term yields doing nothing but seemingly going straight up, yields backed off their decade-long highs in a big way this week. High-growth stocks, which began falling last November before the indices, rallied in a big way in response.
The enterprise software sector is, all things being equal, a very attractive sector. These tools help businesses function and become more productive, and they tend to be "sticky" products. After all, it's a pain for companies to switch and retrain their entire workforce on a new software system, and you aren't going to stop using software if the economy goes into a downturn. Meanwhile, recurring subscription revenue is quite attractive, especially in lean times or a recession.
Source Fool.com
