Monday.com's Stock Price Just Exploded. Time to Buy?
Shares of Monday.com (NASDAQ: MNDY) are soaring right now. The stock has gained 53% in a week, including a 21% jump on Wednesday, May 15.
The maker of cloud-based project-management and collaboration tools isn't exactly soaring at all-time highs, though. The inflation-based flight from high-flying growth stocks was tough for Monday.com investors, and the stock fell 60% in 2022.
It has nearly doubled from that point, but it's a long way back to the top. It would take an 88% price gain to revisit the peak price of $445 per share in early November 2021.
Is the recent jump in Monday.com's price the start of a long-term growth story, or just another forgettable charting squiggle?
What makes Monday.com special?
The company specializes in ultra-personalized project management solutions. Rather than selling the same one-size-fits-all platform to every customer, Monday.com provides an online development platform that allows users to customize its tool kit. No matter how specific their requirements might be, Monday.com's Work OS will get them there.
It's a low-code development system, where users drag the right functions into place instead of hand-coding things from scratch. The resulting workflow presentations have a modern look and feel, by default. Visualization of project data is key, and users can automate anything.
The Work OS platform is priced to move, too. Small teams and enterprising individuals can start with Monday.com's free plan, with a limited set of system templates and a two-seat maximum team size. On the upper end, businesses like Coca-Cola, Caterpillar, and Universal Music rely on the company's full-feature platform.
And the company is expanding its horizons. The classic work-management product was joined by two new systems earlier this year. The Monday.com Dev app-development system and its Sales CRM solution for customer relations management hit the ground running. They are bringing in new customers while inspiring existing clients to sign larger deals.
"The new products that we launched -- CRM, Dev -- continue to gain traction within existing customer base, and therefore they contribute to the fact that we are more stabilized with our customers," chief financial officer Eliran Glazer said on last week's first-quarter earnings call.
Monday.com by the numbers
Monday.com relies on the standard growth-stock tool belt to drive growth. The company is developing and launching more products, while investing more than half its incoming revenue into sales and marketing efforts.
A recent price increase didn't slow down customer acquisition, suggesting that Monday.com could boost its revenue with more price changes over time. Happy customers aren't going anywhere, as long as the software-as-a-service subscription fees remain reasonable.
By now, you have probably figured out that a strong earnings report played a part in Monday.com's recent stock price gains. The company exceeded Wall Street's consensus revenue target by 3% and breezed by expectations of $0.40 in earnings per share (EPS) with adjusted EPS of $0.61.
The report highlighted Monday.com's robust cash flow, growing exposure to enterprise-class customers, and solid footing in the small and medium business (SMB) market. After moving the Monday.com Sales CRM product from a beta test to a full production-grade launch, the product now has 16,976 active accounts, up from 13,318 in the previous quarter and 5,441 a year ago. The Dev product is on a similar growth trajectory.
Yes, you can buy Monday.com stock today
Monday.com's Work OS is a user-friendly, affordable tool for project management and business collaboration. The stock may have been overheated and in need of a cooling-off period a couple of years ago, but it took an ice bath and came back swinging on the other side.
This isn't a cheap stock today, trading at 638 times trailing earnings and 15 times sales. But sometimes you get what you pay for, and Monday.com is a skyrocketing growth stock addressing a truly epic global market. Its products can serve anything from a mom-and-pop shop to a global giant, and who doesn't need a project management tool?
So Monday.com might not appeal to price-sensitive investors, but I can't argue with the company's customer growth, soaring revenue, and recently positive earnings. Every metric is moving in the right direction, too:
MNDY revenue (TTM) data by YCharts; TTM = trailing 12 months.
The stock chart has been bumpy so far, and I understand if you would rather wait for another price drop so you can buy Monday.com on a dip. At the same time, I won't be surprised if the stock simply keeps climbing back to the highs of yesteryear (and beyond).
You can always start with a small investment and build on it over time. Buying in thirds is one popular investing method in this vein, and dollar-cost averaging is another. Or you could commit to your Monday.com investment with a larger bet.
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Anders Bylund has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Monday.com. The Motley Fool recommends Vivendi Se. The Motley Fool has a disclosure policy.
