Data Stocks: The Future of the Modern Market

Data Stocks: The Future of the Modern Market

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Why is data important in our society?

Information is key to advancing as a cohesive society. Data science allows us to significantly improve quality of life as well as solve problems, create new insight, and tackle the most prevalent global dilemmas.

The basis of everything we see around us was originally a byproduct of analyzing data. Using numbers and quantitative observation was how humanity was able to create the very world we live in today. The most integral part of scientific discovery is numerical data, where the ability to analyze and conclude has become one of the most desirable skills of our time.

Across the fields of medicine and drug discovery, data is key to solving the health problems of the world. Technology giants such as Apple, Google, and Meta use and collect more than 20 petabytes of data every day from user interaction to device health, which is extremely relevant in their product updates and changes of services that we use every day.

Even in the stock market today, millions of people rely on data and numerical analysis to determine their financial decisions. Companies of almost any scale rely on data in supply and demand, revenue, and the ability to purchase services.

Having data accessible through search engines provides scholars, students, professionals, and researchers alike education and informs billions of people. It provides anyone with access to it the ability to learn almost any skill, read any article, browse any research. Without data, this insight that we take for granted every day would not exist, and accessing information upon random desire would become nearly impossible to do. This uniform platform to discover drives our urge to learn. As our world continually transitions into an information-heavy society, data protection, storage, and other services are becoming increasingly valuable for businesses of any kind. But how will this reflect on the stock market now?

How is data serviced?

Data companies across the world have seen this societal change and have developed companies for protection, mass cloud storage, and analytics for data of almost any kind. Tools and models that perform basic analysis are a staple of companies across the globe, as they are used in many different company models.

Data warehouses, data lakes, and databases are some of the most common storage models, each revolving around the concept of an organized storage method where masses of files become easily accessible. Recently, a company known as Snowflake took the data warehousing scene by charge, becoming one of the largest companies in this industry today. Across the quarters of the recent year, Snowflake produced constant results of increased revenue. Their sales and gross profit have been reaching unseen heights, but have unfortunately not reflected well on the market.

Displayed in the model from Simply Wall Street, the stock has reached new lows, largely due to the Fed raising interest rates in response to the highest inflation in 40 years. This especially affects companies such as Snowflake and other tech giants because higher rates proportionally influence price to earning (PE) ratios. A stock with a high PE ratio implies overvaluation due to this increased interest, and therefore slows down cash flow as well as general progress as a business. As we can see in this graph, the current stock price of Snowflake has fallen short of its recent peaks in 2021

and 2022, reaching a low of $113.30. The stock has wavered up and down but ultimately has been significantly hindered by the described inflation. Analysts predict that in the next five years, the stock will very slowly recover from these losses. Despite this, the fundamental value of the stock remains: their service is still very useful to companies across the world, and it is possible that the price will rise again and reflect this need.

Contrary to the less-modern methods of warehousing and mass storage, companies such as Datadog have taken a more analytical approach to handling data. Their many services revolve around using data to improve customer service and interaction. Quoted from their website, “by collecting device-level data in the same platform as service-level metrics, traces, and logs, Datadog breaks down silos between DevOps [developers] and Network teams so they can work together to pinpoint the root cause of customer-facing issues.” They monitor the links between serverside interaction, databases, and UI, to make any service as usable and optimizable. Similar companies to Datadog such as Grafanna operate privately, providing Datadog with an edge over some of their peers.

Contrary to Snowflake in warehousing, analysts deem Datadog as an undervalued stock and have projected increases in stock price, annual growth, revenue, and return on equity. Many of the world’s largest investors have bought thousands of shares at its current low price. Analysts from Simply Wall Street display these beliefs. Datadog is expected to follow the red dotted line as the interest rate increase eventually subsides. Their emergence as a company will also benefit this, as their popularity is strongly growing in recent years. Providing such a useful tool at such a large scale puts Datadog as a company in much higher regard than their competitors. “Even if these extremely positive projections fail to reach their full potential, fundamentally, Datadog is a great investment” (SeekingAlpha).

Another interesting take on data servicing that is quite unique to the likes of Datadog, Snowflake, and their competitors is the servicings of MongoDB; who have a great focus on the data packaging, storage, and dependencies related to software projects and app development. MongoDB aims to make using data files and databases simple,

with tools to link connections between file formats and code. They emphasize on securing files for company purposes, being a very versatile tool to users alike. Analysts of Simply Wall Street see a recovery in the company after their recent 36% 6-month fall after the sudden increase of interest rates and general fall of the tech side of the market. Despite falls from its price peak in late 2021, MongoDB’s services are being used more now than ever before. If analyst predictions are correct, this fall should transition into a rocket upward to its previous heights, confirming their new resurgence of service usage. Investing now marks great growth in the near future, as services like theirs are indispensable to countless companies of almost every industry.

A Future of Data

In 2006, British mathematician Clive Humbly made a renowned prediction about the future of modern society: “Data is the new oil.” With the technological boom of the 21st century modeling the ideas of the previous industrial revolutions, many political and scientific leaders of the world see a new usage of data as a model of the recent oil boom. In a WIRED article “Data Is the New Oil of the Digital Economy” by Joris Toonders, Toonders explains how “we’re in a digital economy where data is more valuable than ever. It’s the key to the smooth functionality of everything from the government to local companies. Without it, progress would halt… Companies must begin treating data as an enterprise wide corporate asset while also managing the data locally within business units” to become profitable in this new economy.

The ability to “refine” and process data into tangible changes in ideals, development of concept, and basis for discovery can employ unbounded success for a company of any sector willing to strive for a deeper understanding of this almost foreign concept. Access to mass data can form insights greater than any opinion. Understanding it now and creating a service based system now will only prove great reward financially. The new revolution of data in our society has proved to have several financial byproducts, and the market will sooner than later adapt and display this change in our market.

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