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Why MongoDB Shares Jumped as Much as 10.5% This Morning, Just for a While

By Anders Bylund - Dec 10, 2019 at 2:16PM

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The alternative database expert beat analyst targets in the third quarter, but not by as wide a margin as some expected -- the surprise just wasn't big enough to impress the market.

What happened

Shares of MongoDB (MDB 7.29%), a specialist in nontraditional database software, rose as much as 10.5% on Tuesday morning, following the release of strong third-quarter results. The gains didn't last long, though. By 12:50 p.m. EST, the stock had lost the entire gain, and was trading at Monday's closing price again.

So what

In the third quarter of fiscal year 2020, MongoDB's sales rose 68% year over year to $109.4 million. On the bottom line, adjusted net losses shrank from $0.30 to $0.26 per share. The analyst consensus pointed to a net loss of $0.28 per share on revenues near $99.8 million. Management also issued full-year guidance above the current analyst view.

A young office worker, elbows on his desk and palms pressed to his temples, stares at his laptop screen in wide-eyed surprise.

Image source: Getty Images.

Now what

As usual, MongoDB's fantastic revenue growth was driven by the rapid adoption of MongoDB Atlas, a cloud-based database solution in a subscription-based software-as-a-service model. Atlas sales rose 185% year over year, accounting for 40% of the company's total revenue in the third quarter.

These results provided ample support for the morning's sharp spike, but the market enthusiasm faded as analyst reports started to roll in. Bulls and bears alike reduced their target prices on the stock, citing lofty valuation ratios and a smaller revenue surprise than usual. Don't cry for MongoDB's investors, though -- the stock can still boast a 55% gain over the last 52 weeks.

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