After the worst week of 2023 on Wall Street, investors are in the mood to claw back some of their recent losses. Stock index futures were mixed early Monday morning, but the Nasdaq Composite (^IXIC +0.77%) looked as though it might put in the best performance. Nasdaq futures were up almost half a percent as of 8 a.m. ET.
Cloud computing has been a high-growth area for several years, but shareholders have had to come to grips with the possibility of slowing expansion as economists worry about a possible recession. Nevertheless, for Monday.com (MNDY 4.27%) and Fastly (FSLY +5.64%), the mood among investors was optimistic after both tech companies enjoyed good news. As a result, both cloud stocks moved sharply higher, and many are hopeful that the gains will be just the beginning of a longer-term trend.
Happy Monday
Shares of Monday.com jumped 11% in premarket trading Monday morning. The aptly named provider of workplace management software reported fourth-quarter financial results that showed its growth story is still intact.
Monday's numbers were impressive. Sales of $150 million were up 57% year over year. Adjusted earnings came in at $0.44 per share, which compared favorably to Monday's $0.26-per-share showing in the fourth quarter of 2021. That capped a year of 68% revenue growth, and although Monday did still lose $0.73 per share on an adjusted basis in 2022, that loss was narrower by almost half from 2021's final figures.
NASDAQ: MNDY
Key Data Points
Many of Monday's key metrics were also solid. Net dollar retention rates exceeded 120%, including a 130%-plus showing for customers with more than 10 users. Monday had 1,474 customers spending $50,000 or more annually on their software subscriptions, up 86% from 12 months ago, and those high-value customers had net dollar retention rates above 135% on average.
Investors were satisfied with Monday's guidance for 2023, even though it indicates inevitable slowing of its growth. Monday expects sales of $688 million to $693 million for the coming year, suggesting growth of 33% to 34%. With a long runway ahead of it, Monday shareholders are happy to see the stock starting to regain traction after steep losses shortly after its mid-2021 initial public offering.
Fastly looks to get back its momentum
Elsewhere, shares of Fastly also moved higher early Monday morning, with gains of 9% in premarket trading. The edge-computing specialist got favorable comments from Wall Street analysts that helped build up more confidence in the cloud stock's prospects.
Analysts at BofA Securities expressed an extremely positive view on Fastly, boosting its rating on the stock all the way from underperform to buy. The move skipped over the intermediate step of a neutral or market-perform rating, and such double-upgrades are relatively rare among Wall Street analysts. BofA also boosted its price target on Fastly stock dramatically, taking it from $10.50 per share all the way to $16.
NASDAQ: FSLY
Key Data Points
Fastly has had considerable trouble over the past couple of years, as initial enthusiasm during the tech boom in 2020 gave way to concerns about competitive pressures. Some rivals in the edge-computing space, particularly Cloudflare, have been able to grow at a faster pace than Fastly has managed. That reduced investor interest at a key time for the industry, as shareholders wanted to go with companies that could produce the steepest growth rates.
There's more than enough room for multiple players in content delivery networks and edge computing, though, and analysts are starting to recognize that Fastly still has some potential. With its stock still down 90% from all-time highs, getting back on track is a priority for Fastly in order to generate more enthusiasm among shareholders.
