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Why Monday.com Stock Fell 14% in September

By Beth McKenna – Oct 5, 2021 at 9:38AM

Key Points

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Shares of the work management software provider have more than doubled since the June IPO.

What happened

Shares of Monday.com (MNDY 1.18%), whose platform enables organizations to create software applications and work-management tools, fell 14% in September, according to data from S&P Global Market Intelligence. This decline is probably attributable to last month's weak overall market and short-term traders taking some profits following the stock's big run-up in August. That run-up was driven by the company's release of second-quarter results that delighted investors.

For context, the S&P 500 and Nasdaq Composite indexes declined 4.8% and 5.3%, respectively, last month.

Since its June 10 initial public offering at $155 per share, Monday.com stock is up a whopping 112% through Oct. 4. The S&P 500 has returned 2.2% and the Nasdaq has risen 2.8% over this period. 

A person looks at a laptop. A digital rendering of a cloud with the word "AI" and various icons is superimposed over the image.

Image source: Getty Images.

So what

In August, Monday.com stock surged 71.4% driven by a two-day jump of more than 45% following the company's Aug. 17 release of robust second-quarter results.

In Q2, revenue soared 94% year over year to $70.6 million. Growth "was driven by large expansions within our existing base and strong growth upmarket as we continue to see momentum in enterprise," CFO Eliran Glazer said in the earnings release. 

The company's net-dollar retention rate for customers with more than 10 users was over 125%. This means existing customers in this category increased their spending on the company's services by an average of more than 25% compared to the year-ago quarter.

Monday.com isn't profitable, which isn't unusual for a newly public tech company. In Q2, net loss according to generally accepted accounting principles (GAAP) was $32.5 million, or $1.67 per share, compared to a net loss of $33.1 million, or $2.79 per share, in the second quarter of last year. Adjusted for one-time items, net loss was $11.3 million, or $0.26 per share, compared to a net loss of $15.1 million, or $0.39 per share, in the year-ago quarter.

Now what

For the third quarter, management guided for revenue in the range of $74 million to $75 million, representing growth of 74% to 76% year over year. For full-year 2021, management expects revenue of $280 million to $282 million, representing annual growth of 74% to 75%.

Monday.com's strong revenue growth makes its stock worthy of a place on the watch lists of growth investors.

Beth McKenna has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends monday.com Ltd. The Motley Fool has a disclosure policy.

Stocks Mentioned

Monday.com Stock Quote
Monday.com
MNDY
$108.07 (1.18%) $1.26

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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