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Why MongoDB Shares Fell 21% Last Month

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What happened

Shares of MongoDB (NASDAQ: MDB) fell 20.9% in September 2019, according to data from S&P Global Market Intelligence. The database software developer’s slide started with a merely solid earnings report that failed to excite investors.

So what

MongoDB saw second-quarter sales rising 67% year over year, landing at $99.4 million. On the bottom line, net losses were reduced from $0.34 to $0.26 per diluted share. Your average Wall Street analyst would have settled for a net loss of $0.28 per share on revenues in the neighborhood of $91.7 million.

But the company’s third-quarter earnings guidance was only in line with the analyst views at the time despite a slightly more optimistic revenue prognosis. For high-octane growth stocks like MongoDB, that’s not always enough to preserve the stock’s seat in Wall Street’s nosebleed section. The stock plunged 17% over the next three days.

Now what

Several analysts followed up on MongoDB’s results with rosy reports on their own, often raising their price targets on the stock to at least $180 per share. Barclays analyst Raimo Lenschow expected these results to trigger a short squeeze and drive the stock much higher at the drop of a hat.

That didn’t happen. At this point, MongoDB’s stock has nearly doubled over the past 52 weeks despite a 16% decline in the past three months. You can call it a discount if you like, though it’s always hard to call MongoDB a value stock when both earnings and free cash flows are negative.

That’s life in the fast lane — MongoDB’s $7.4 billion market cap is built on investor expectations of continued hypergrowth for the foreseeable future.

This article was originally published on All figures quoted in US dollars unless otherwise stated.

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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Anders Bylund has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends MongoDB. The Motley Fool has a disclosure policy.

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