MongoDB Stock To $282?

MongoDB (MDB) stock has jumped 22% during the past day, and is currently trading at $401.99. Our multi-factor assessment suggests that it may be time to reduce exposure to MDB stock. We are primarily concerned current valuation and a price of $282 may not be out of reach. We believe there are only a couple of things to fear in MDB stock given its overall Strong operating performance and financial condition. But given its Very High valuation, the stock appears Relatively Expensive.

Below is our assessment:

Ask yourself – Is holding MDB stock risky? Of course it is. High Quality Portfolio mitigates that risk.

Let’s get into details of each of the assessed factors but before that, for quick background: With $33 Bil in market cap, MongoDB provides a general-purpose database platform offering a commercial database server for enterprise use and a hosted multi-cloud database-as-a-service solution.

[1] Valuation Looks Very High

This table highlights how MDB is valued vs broader market. For more details see: MDB Valuation Ratios

[2] Growth Is Very Strong

• MongoDB has seen its top line grow at an average rate of 27.2% over the last 3 years
• Its revenues have grown 22% from $1.8 Bil to $2.2 Bil in the last 12 months
• Also, its quarterly revenues grew 23.7% to $591 Mil in the most recent quarter from $478 Mil a year ago.

This table highlights how MDB is growing vs broader market. For more details see: MDB Revenue Comparison

[3] Profitability Appears Very Weak

• MDB last 12 month operating income was $-165 Mil representing operating margin of -7.5%
• With cash flow margin of 12.2%, it generated nearly $270 Mil in operating cash flow over this period
• For the same period, MDB generated nearly $-79 Mil in net income, suggesting net margin of about -3.5%

This table highlights how MDB profitability vs broader market. For more details see: MDB Operating Income Comparison

[4] Financial Stability Looks Very Strong

• MDB Debt was $36 Mil at the end of the most recent quarter, while its current Market Cap is $33 Bil. This implies Debt-to-Equity Ratio of 0.2%
• MDB Cash (including cash equivalents) makes up $2.3 Bil of $3.5 Bil in total Assets. This yields a Cash-to-Assets Ratio of 66.2%

[5] Downturn Resilience Is Weak

MDB has fared worse than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.

2022 Inflation Shock

• MDB stock fell 76.5% from a high of $585.03 on 16 November 2021 to $137.35 on 9 November 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
• The stock is yet to recover to its pre-Crisis high
• The highest the stock has reached since then is $500.90 on 11 February 2024 , and currently trades at $401.99

 
2020 Covid Pandemic

• MDB stock fell 45.0% from a high of $180.09 on 19 February 2020 to $98.97 on 16 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 11 May 2020

But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read MDB Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

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