MongoDB (MDB) has steadily marched upward across the past six months as well as the past year. However, the stock recently dipped from $418 in February down to its current price of $292.
MDB makes database platforms used by companies and organizations in the financial space, the healthcare space, government, retail, entertainment, and more. Headquartered in New York, MDB provides a litany of products ranging from MongoDB Professional to MongoDB Atlas, MongoDB Enterprise, Cloud Manager, Ops Manager, and MongoDB Stitch.
Now that MDB has retreated to somewhat of a reasonable price level, investors far and wide wonder whether this is the optimal time to establish a position. Let's take a closer look at this software company to determine if it is a Buy or a Sell.
MDB Points of Note
MDB's fourth-quarter earnings revealed the company suffered a quarterly loss of 33 cents per share. The silver lining is that analysts anticipated a larger loss of around 40 cents per share. However, it is concerning that MDB reported a loss of 25 cents in the same quarter one year ago. The company's revenue of $171 million for the final quarter of 2020 surpassed estimates by slightly more than 9%.
Furthermore, this revenue is greater than that of $123.52 million recorded in the same quarter one year ago. However, MDB executives' guidance for the upcoming year was quite conservative, causing investors and Wall Street analysts alike to question whether the stock is worthy of their investing dollars.
MDB's DBaaS solution accounts for nearly one-half of its aggregate revenue. This is both good and bad in that the DBaaS revenue is up 41% from the same quarter in the prior year, yet the company is becoming increasingly dependent on this single revenue driver.
The MDB bulls are pretty proud of the fact that the company added 2,200 new customers during the quarter, reaching a total of 24,800. However, MDB is still stuck in the red. The company might be several years away from entering the black.
MDB executives have made no secret of the fact that it will continue to make aggressive investments. MDB will likely have non-GAAP losses between $74 million and $84 million through fiscal 2022. This is concerning as the company had a non-GAAP loss of slightly under $60 million in the prior fiscal year.
MDB According to Analysts
Analysts are bullish on MDB, establishing an average target price of $391.08. If MDB were to reach this price, it would have popped by nearly 35%. The highest analyst target price for MDB is $500, while the low is $300. Of the 16 analysts who have studied the stock, six consider it a Strong Buy, six consider it a Buy, and four consider it a Hold.
MDB POWR Ratings
MDB has an F POWR Ratings grade. Though the stock has a C grade in the Momentum component, it has D grades in the Stability, Quality, and Sentiment components. You can learn more about how MDB fares in the POWR Ratings' growth and value components by clicking here.
Of the 117 publicly traded companies in the Software - Application industry, MDB is ranked 107. Click here to find top stocks in that industry.
Buy or Sell?
Sell. MDB is a POWR Ratings dud and will likely be so for at least a couple more months. The stock's POWR Ratings components are littered with D grades. Making matters worse is the fact that MDB is ranked worse than all but 10 of the 117 stocks in its industry. The fact that MDB is years away from profitability adds even more reason to avoid this stock.
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MDB shares fell $0.50 (-0.17%) in premarket trading Friday. Year-to-date, MDB has declined -17.49%, versus a 9.53% rise in the benchmark S&P 500 index during the same period.
About the Author: Patrick Ryan
Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management.
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