MongoDB crushed analyst expectations in final evening’s third-quarter report, however the inventory is plunging anyway. Here’s why.
Ultramodern database software program specialist MongoDB (MDB -15.08%) had a nasty market day on Tuesday. The inventory was down 13.9% at 11:45 a.m. ET regardless of a formidable third-quarter report. The inventory initially jumped on the earnings information, however MongoDB traders rapidly backed down a couple of minutes later once they seen that the corporate additionally introduced a administration change.
Strong outcomes overshadowed by an surprising administration change
First issues first: MongoDB’s third-quarter gross sales grew 22% yr over yr, touchdown at $529 million. Earnings got here in at $1.16 per share, up from $0.96 per share within the year-ago quarter. Your common analyst would have settled for earnings of roughly $0.67 per share on gross sales close to $498 million. So far, so good. MongoDB’s inventory rose greater than 10% within the first jiffy of after-hours buying and selling.
But the beneficial properties did not final. MongoDB’s inventory chart dipped sharply decrease when traders seen the management replace. Longtime CFO and COO Michael Gordon will go away his MongoDB posts on the finish of January, sticking round in an advisory function till a everlasting alternative will get snug with the job.
Is MongoDB inventory a purchase now?
Despite a number of analysts prodding for more information on the earnings name, Gordon did not say whether or not he is retiring or taking a brand new job some other place. Either approach, MongoDB is dropping an essential C-suite identify after almost 10 years of service. It’s straightforward to see why traders are nervous about this massive change, particularly since Gordon’s function includes each the corporate’s monetary administration and day-to-day operations. His successor (or successors, if the COO and CFO roles are break up in 2025) can have some massive sneakers to fill.
At the identical time, it is easy to see how Gordon’s exit announcement was missed for half an hour. Squeezed into an extended record of sturdy monetary outcomes and attention-grabbing enterprise developments, the “govt management replace” could seem like a small level at first look.
On a grander scale, MongoDB’s inventory had traded sideways for years regardless of hovering gross sales and shrinking bottom-line losses. The inventory was most likely overvalued 5 years in the past, however the price-to-sales ratio is getting fairly akin to bigger and extra worthwhile (however slower-growing) database rival Oracle (ORCL -7.58%).
Today’s worth drop appears like an invite to take a better have a look at this promising development inventory. If nothing else, the mini-crash erased the value premium MongoDB earned from the Microsoft (MSFT -0.44%) partnership it introduced final month.
Anders Bylund has no place in any of the shares talked about. The Motley Fool has positions in and recommends Microsoft, MongoDB, and Oracle. The Motley Fool recommends the next choices: lengthy January 2026 $395 calls on Microsoft and quick January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure coverage.
