What Happened: Shares of project management software maker Monday .com (NASDAQ:MNDY (NASDAQ:MNDY)) fell 6.6% in the morning session after Citi analyst downgraded the stock's rating from Buy to Neutral and lowered its price target from $277 to $270. Some reasons cited for the revised sentiment include "slowing demand with a more muted impact from price increases."
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Monday.com? Find out by reading the original article on StockStory.
What is the market telling us: Monday.com's shares are very volatile and over the last year have had 22 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was about 2 months ago, when the stock dropped 14.5% on the news that the company reported fourth-quarter results with revenue guidance for the next year that suggests a slowdown in growth (FY'2024 rev growth of 27.5% at the midpoint vs. 41% in 2023). In addition, operating income guidance for the same period was below expectations.
There are also macro challenges to contend with, and management sent a mixed message. "While economic and geopolitical challenges remain, we are highly confident in our ability to carry this momentum into FY24 and beyond, as we continue to focus on driving top-line growth and building market share."
On the other hand, revenue and EPS exceeded expectations during the quarter. Revenue guidance for the next quarter also came in roughly in line with expectations. Overall, it was a mixed but weaker quarter, with guidance and macro negativity driving the stock performance.
Monday.com is up 13.4% since the beginning of the year, but at $201.64 per share it is still trading 14.5% below its 52-week high of $235.92 from February 2024. Investors who bought $1,000 worth of Monday.com's shares at the IPO in June 2021 would now be looking at an investment worth $1,128.