Wait for a Dip to Buy Monday.com Stock
Monday.com Ltd (NASDAQ: MNDY), a provider of a cloud-based work operating systems used for project management, CRM, marketing, and software development, saw its shares plunge 30% in the last five days. The drop came despite an earnings beat, as forward-looking signals failed to match investor expectations. Conservative guidance and warnings over web traffic volatility from Google’s search changes triggered a sentiment-driven sell-off, rather than evidence of any significant fundamental deterioration.
The $13 billion SaaS firm reported $299 million in revenue (+30% YoY) and adjusted EPS of $1.09, both comfortably ahead of consensus estimates. However, management’s cautious Q3 outlook, only modest full-year upgrades, and commentary about search traffic uncertainty, undermined bullish sentiment. Our multi-factor analysis — covering Growth, Profitability, Financial Stability, and Downturn Resilience — shows MNDY remains operationally solid, but valuation and volatility risks remain elevated. That said, if you seek upside with lower volatility than individual stocks, the Trefis High Quality Portfolio presents an alternative – having outperformed the S&P 500 and generated returns exceeding 91% since its inception. Separately see, Ethereum: ETH Price To $10,000?
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Let’s get into the details of each of the assessed factors.
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[1] Valuation Looks Very High
Monday.com trades at a steep premium to the S&P 500, with a price-to-sales ratio of 12.8 versus 3.2 and a price-to-free cash flow multiple of 252.8, more than ten times the index’s 23.6. For more details, see: MNDY Valuation Ratios
[2] Growth Is Very Strong
Over the past three years, MNDY’s revenue has grown at an average annual rate of 43.1%, far outpacing the S&P 500’s 5.7%. Over the last twelve months, sales climbed 32% to $1.0 billion from $784 million, versus the index’s 5.0% gain. For more details, see: MNDY Revenue Comparison
[3] Profitability Appears Weak
While Monday.com posted a modest $53 million in net income over the past year (a 5.1% margin), its operating income was negative $6.2 million (-0.6% margin) versus the S&P 500’s 18.6%. The bright spot: robust cash generation, with $331 million in operating cash flow and a 31.9% margin, well above the index’s 20.3%. For more details, see: MNDY Operating Income Comparison
[4] Financial Stability Looks Very Strong
Monday.com has historically been far more vulnerable than the S&P 500 during market downturns. During the 2022 inflation shock, the stock plunged 82.8% from its November 2021 high of $444.70 to $76.46 a year later, compared to a 25.4% peak-to-trough drop for the index. Unlike the S&P 500, which recovered within 464 days, MNDY has yet to reclaim its pre-crisis high, peaking at $327.92 in February 2025 and currently trading at $172.
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 MNDY Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.
Looking for Smarter Alternatives?
Monday.com is growing fast, has strong financial stability, and an enviable cash position — but it’s expensive and historically vulnerable to market shocks. If you believe in the long-term story, patience for a better entry point could pay off.
You could explore the Trefis Reinforced Value (RV) Portfolio, which has outperformed its all-cap stocks benchmark (combination of the S&P 500, S&P mid-cap, and Russell 2000 benchmark indices) to produce strong returns for investors. Why is that? The quarterly rebalanced mix of large-, mid- and small-cap RV Portfolio stocks provided a responsive way to make the most of upbeat market conditions while limiting losses when markets head south, as detailed in RV Portfolio performance metrics.
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