Why Is Monday.com (MNDY) Stock Soaring Today

Kayode Omotosho /
2024/01/08 2:03 pm EST

What Happened:

Shares of project management software maker Monday.com (NASDAQ:MNDY) jumped 5.3% in the afternoon session after investors bought the dip with the technology sector, which lost 4% last week, as yields fell. The yield on the 10-year Treasury yield, meanwhile, lost nearly 4 basis points. Other than potential positioning and a bounce after a losing week, there was nothing more specific. During the week, traders will get greater clarity into the path of rate cuts from the central bank. The December 2023 consumer price index is set for release, followed by the producer price index.

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What is the market telling us:

Monday.com's shares are very volatile and over the last year have had 32 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business. 

The biggest move we wrote about over the last year was 8 months ago, when the stock gained 12.1% on the news that the company reported a "beat and raise" quarter. First-quarter results exceeded analysts' expectations for revenue, gross margin, operating income, free cash flow, and earnings per share. Revenue guidance for the next quarter and full year also came in above Consensus, with the company raising the full-year guidance. Adding to the improved cash position, Monday.com enhanced its profitability with non-GAAP operating income at near break even. Likewise, the operating income margin guidance for the full year showed expectations of near break even. Management highlighted the continued focus on profitability, adding that "the monday.com team is off to a strong start in 2023, with our results reflecting increasing customer demand for our Work OS platform and product suite, as well as our ongoing commitment to improving efficiency and profitability." The Q1 results were strong, with solid revenue growth and improved margins and cash position. Overall, it was a standout quarter compared to the mixed results from other tech companies, and this should cause investors to raise their projections.

Monday.com is up 5.9% since the beginning of the year, and at $188.34 per share it is trading close to its 52-week high of $197.03 from December 2023. Investors who bought $1,000 worth of Monday.com's shares at the IPO in June 2021 would now be looking at an investment worth $1,054.

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