Why ElasticSearch (ESTC) is still overvalued after a 30% drop this month

I wanted to bring some qualitative discussion as to why I think Elasticsearch is only at the start of its downfall.

You'll need to know some history behind how Elasticsearch started and why it became so popular in the DevOps world.

TLDR: They used to be opensource but Amazon basically stole their code and offered their service on AWS with the same name. Elasticsearch got pissed, changed their licensing from open source in 2021 and sued Amazon. Fast forward to today, theyve now settled with Amazon. However, since 2021, AWS has created their own competitor called Opensearch which is basically just a forked version of Elasticsearch with Amazons own contribution to it…. and they've been gaining a ton of market share.

The main reasons why

1. Engineering managers and open source devs that spent time on developing Elasticsearch open source got screwed by Elastic in 2021 and trust eroded

2. Opensearch is a part of the AWS ecosystem and why would a company go out of their way to add another vendor like Elastic if everythings already managed under AWS for them?

This graph shows a snapshot of the adoption of both:
https://db-engines.com/en/ranking_trend/system/Elasticsearch%3BOpenSearch%3BSplunk?

As you can see Opensearch is gaining more and more traction where as Elastic seems to be stagnating.

However, anecdotally, I think this is worse than it looks for Elasticsearch. I know for a fact internally teams still refer to Opensearch as Elasticsearch because it is just a fork of it.

I think this story will be similar to how Microsoft Teams due to its distribution channels completely swept up market share from Zoom. Similarly, I think this will happen with Opensearch and Elasticsearch.