MDB: Is MongoDB Stock a Smart Investment Today?
The last few months have seen
growth stocks across verticals significantly underperform the
broader markets. Companies part of the SaaS
(software-as-s-a-service) sector, such as
MongoDB (NASDAQ: MDB), have been among the worst hit in 2022 as
investors are worried about steep valuations, in addition to a
range of macro-economic factors.
Shares of MongoDB are down 48% in
2022, and the stock is trading 58% below all-time highs. So let’s
see if MDB stock is a buy right now, given its depressed
MongoDB is a cloud-software
company. Its customers include the likes of Boots UK, Forbes,
Keller Williams, Travelers, Verizon
Wells Fargo (NYSE:
WFC). Its services
include MongoDB Enterprise Advanced, a commercial database server
that customers can run on a cloud, on-premise, and in a hybrid
There is also MongoDB Atlas: a
multi-cloud database-as-a-service solution that allows customers to
access all the functionalities required by developers to get
started with MongoDB. Further, the company also offers consulting
and training-related services.
MongoDB beat earnings estimates
MongoDB delivered a surprising
performance in the
first quarter of the fiscal year
2023, ending April 30.
The SaaS company surprised investors in terms of profitability.
Despite market uncertainties, revenue increased to $285.4 million,
up 57% year-over-year.
The top-line growth was
attributed to its cloud data platform Atlas as sales grew by 82%
for this business. Its gross profit rose to 75% compared to 72% in
Q3 of fiscal 2022. Adjusted operating income for the quarter rose
6x to $17.5 million. MongoDB’s adjusted net income also improved to
$15.2 million or $0.20 per share against the net loss of $3.9
million or $0.06 per share reported a year ago.
MongoDB is growing through partnerships
One of the fastest and easiest
methods of growing fast is partnering with the industryU+02019s top
players instead of competing with them. So MongoDB has partnered
with giants like Amazon (NASDAQ:
Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL)to hit its expansion goals.
In March, MongoDB and
Amazon agreed to work together
towards helping other organizations transfer their databases into
the cloud. Further, the companies have also decided to integrate
their sales, marketing, and developer training efforts.
In April, MongoDB had launched a
service on Alphabet’s platform. It’s based on a pay-as-you-go
subscription model and would let developers build and scale their
applications with its Atlas platform on GoogleU+02019s cloud
infrastructure quickly and cost-effectively.
These partnerships have been one
of the driving forces toward profitability that have helped the
company cut down on unnecessary research and development
MDB stock has great prospects
The cloud-based service industry
has just started growing. MongoDB’s offerings are really
attractive, and therefore the company has the potential to become
one of the top industry players in the coming years. Its offerings
like Atlas Serverless,
are powerful tools. They can drive
the company’s progress by helping customers accelerate the
production of new applications at a reduced cost.
MongoDB closed on June 10 at
$254. The average analyst price target for the stock is $385.38.
That’s a potential upside of almost 50%, making MDB stock a top
contrarian bet right now.
If MongoDB can continue to expand
its customer base, its growth prospects will continue to improve.
Therefore, looking at the current price at which the stock is
trading and the potential return it can offer its investors in the
future, the MongoDB stocks appear to be a great buy.
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