Can't trust that day.
The Mamas and the Papas sang about this back in their 1966 hit “Monday, Monday.”
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Monday morning gave no warning to Monday.com (MNDY) , which dropped nearly 30% on, well, Monday, Aug. 11 after the Tel Aviv work-management platform beat analysts' estimates but issued a weaker-than-expected third-quarter revenue outlook.
““We are pleased to report another outstanding quarter for monday.com,” Co-Founder and Co-CEO Ray Mann said during the earnings call.
“Underscored by robust revenue growth of 27%, this performance reflects surging demand for our platform and the powerful value we deliver to customers across industries.”
Mann added that the company continued to “make significant strides in our AI offering, expanding capabilities and accelerating innovation to empower teams and drive impactful results at scale.”
During a Q&A with analysts, Mann said “we do see some pressure from Google (GOOGL) on the news side, though it's not something we didn't encounter before.”
Monday.com
TheStreet Pro's Guilfoyle: Monday.com results solid
Changes in Google's search algorithms can significantly affect businesses that rely on online presence to acquire customers, including software-as-a-service providers like Monday.com.
“This is temporary, we believe, and we are already taking actions proactively to address this, and we believe this is going to be recovered going into the second half of the year,” said Eliran Glazer, co-founder and co-CEO.
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TheStreet Pro’s Stephen Guilfoyle bluntly assessed the market’s reaction to Monday.com's earnings report.
“The results were solid,” he said in his recent column. “The guidance was OK, if not better. Yet, the stock was beaten like a rented mule ahead of the opening bell in New York.”
Guilfoyle, whose career dates back to the floor of the New York Stock Exchange on the 1980s, said the revenue forecast “would be a slight miss, but still be good for growth of 24% to 25%, which is just about what Wall Street is looking for.”
“Monday.com came in trading at 65 times [forward] earnings, so the stock was expensive,” the veteran trader said. “Sales growth is decelerating [but] not weak. Margins are under pressure, but that is largely a function of stock-based compensation.”
Guilfoyle said this was easily correctable “should there be a will to do so.”
At last check after the stock slump, Yahoo Finance measures Monday.com's forward price-to-earnings multiple at around 45.
“Cash flows are excellent and the balance sheet is fortress-like,” he added. “Guidance is the problem this morning. The current quarter looks so-so, but the full year is still looking fairly strong.”
Citi analyst: Monday.com selloff overdone
Monday.com shares are down 26% this year and off nearly 33% from this time in 2024.
“Do I think it's OK to bottom-fish for a trade?” Guilfoyle said. “Yes. As long as the trader/investor understands the risk, understands that catching a falling knife is speculative and obeys their own risk-management protocols such as my 8% rule.”
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The veteran trader's rule, by the way, says never lose more than 8% on any position “unless I'm asleep when it happens.”
Several investment firms issued research reports after the company posted its results.
Citi lowered its price target on Monday.com to $326 from $381 and affirmed a buy rating on the shares after the Q2 report, according to The Fly.
The company's beat of analyst estimates was more modest than usual and performance marketing weighed on the guidance, the analyst tells investors in a research note.
Citi expected more upside in the quarter but says the post-earnings share selloff is “significantly overdone.”
DA Davidson slashed its price target on Monday.com to $275 from $325 and also reiterated a buy rating on the shares.
Monday.com reported a solid quarter with the slightly lower than typical beat of estimates driven primarily by weakness around net new demand from small and medium-sized businesses as a result of changes to Google's search algorithm, the investment firm said.
Monday.com also raised its outlook less than the size of the Q2 beat, even as management remains optimistic about its multiproduct opportunity and move up market, DA Davidson added.
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