MDB - MongoDB: Weak Consumption Trends And Margin Pressures Are A Concern
2024-07-05 04:14:23 ET
Summary
- MongoDB reported its Q1 FY25 earnings, where it beat both its revenue and earnings expectations. However, the consumption growth of Atlas was below expectation-driven by the weaker addition of new workloads.
- Although the management is investing in its strategic account program while expanding its sales capacity and driving genAI-focused product innovation, it reduced its revenue and earnings forecast for FY25.
- This has dampened short-term investor optimism, and for long term, MDB should stand to gain market share, the stock is not attractively priced at its current levels, making it a "hold".
Introduction & Investment Thesis
MongoDB ( MDB ) is a document-based database provider that allows development teams in organizations to better manage data and build applications effectively. The company has severely underperformed the S&P 500 and Nasdaq 100 YTD. I initiated a "hold" rating on the stock before its Q1 FY25 earnings , where my thesis was predicated on my belief that the stock was overvalued given its future growth projections and that the management would have to beat and raise guidance by at least 25% in order to justify its valuation. Since then, the stock has lost more than 24% of its value, as the management failed to surprise....
MongoDB: Weak Consumption Trends And Margin Pressures Are A Concern