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Why MongoDB Stock Slumped Today

By Timothy Green – Updated Nov 19, 2018 at 3:34PM

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The stock market is selling off, and this fast-growing database company is getting hit hard.

What happened

Share of database company MongoDB (MDB 2.74%) were down 11.8% at 3 p.m. EST on Monday. There was no company-specific news. Instead, the stock appears to just be following the broader stock market lower.

So what

The Nasdaq Composite was down about 2.7% with an hour of trading left on Monday, and MongoDB likely just got caught up in the selling. A sky-high valuation may also be playing a role. The company is far from profitable on any basis, and it generated just $192 million of revenue over the past 12 months. That puts the price-to-sales ratio at roughly 16.

A declining chart.

Image source: Getty Images.

MongoDB isn't hurting for growth. Second-quarter revenue soared 61% year over year, and the number of total customers jumped 71%. Atlas, the company's managed database offering, grew by 400%. Those are all impressive numbers, but they're not helping the stock escape a tumbling market.

Now what

The company will need to keep up its exceptional growth rate and move toward profitability to maintain its nosebleed valuation. Its long-term prospects look bright, but it may take a while for the numbers to catch up with the valuation.

Timothy Green 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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