MNDY Earnings

Going into earnings this week, the number that really gives me comfort from last report is:

  • The number of paid enterprise customers with more than $50,000 in annual recurring revenue was 613, up 231% from 185, in the third quarter of 2020.

That’s some significant ARR we can bank on. And if they increased enterprise customers at anywhere near that pace this qtr, their growth rate of 95% should be intact.

Also, remember the last blow-out ER was really junked up by three things:

  1. Surprise decision to move lock up expiration to immediately after earnings
  2. Nearly $100/share price surge the days before ER
  3. UPST collapse on the same day

I’m quite nervous given the insanity we’re experiencing right now in the market and the world, but this company has everything we’re looking for in an early stage hyper grower.

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I’m quite nervous given the insanity we’re experiencing right now in the market and the world, but this company has everything we’re looking for in an early stage hyper grower.

The comforting thought is this scenario has historically proven to be an excellent time to buy or own those early stage hyper growers. Odds are MNDY’s performance will affect its future way more than any temporary market insanity.

We’ll find out soon enough.

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Again, people are worried about MNDY because recent stock market volatility.
If you still worry, then the allocation maybe too high. or not enough cash allocation or too much personal debt/leverage.

I don’t feel nervous about any of my holdings because of price actions including MNDY. I don’t feel nervious about CFLT’s 30% sell off after earning at all as one quarter of bad earning is not determining CFLT’s future. Remember, we invest in numbers and the likelihood of continuation of hyper growth in the future.

MNDY is in a good growth stage.
Let’s focus on two points from last call: 1. Enterpise growth momentum is strong and continues. 2.They don’t neglect small customers.

Small customers are only small in sense of revenue. They can be a big company. What usually happens is they have a small department to try out Monday.com and as they discover more use case, they expand into other deparments. This is reflected in the increasing DBNRR from past few quarters.

"As mentioned previously, upmarket growth is one of our top priorities. I’m pleased to report that our expansion into the enterprise space continues to gain momentum. We ended the third quarter with 613 enterprise customers, up 231% from 185 in the third quarter of 2020. Additionally, we continue to expand within our existing customer base.

Customers with more than $50,000 in ARR, are becoming the kind, I would say, the bulk of our customers. And this is the customers that we are pursuing as part of our marketing and sales efforts. So we expect this trend to continue up.

Important to say that we don’t neglect the smaller customers because they are basically what later will become the bigger customers. So even if we start with – we see the profiting of the big customers, it’s important for us to have the small ones that later become the big ones, if it makes sense to you."

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“It’s not worth taking the risk this season to hold the stock on earnings announcement day,”

The last three posts were all about guessing market reaction to earnings or anchoring on past price action. None of that will ever be a reason for me to buy or sell a company in isolation. I’m not in this to day-trade. I want to own companies that will be much higher in the future. A +/- 20% reaction to a blow-out earnings report means nothing in the long run, compared to compounding returns fueled by fundamental business growth (note I wrote PLUS or minus…either direction…both are just price changes and need fundamental-context to have meaning).

As always, we each make our own decisions. I might sell a little if it makes me feel safer. I just want to be real honest with myself about the reasons, and then be OK with it. I believe I have managed to train my mind to stop fearing market reactions to one-time or macro events that are not directly related to company performance (stock splits and earnings reactions are the obvious ones that come to mind). I give TMF 100% of the credit for teaching me this over the years before I ever found this board. It takes time and repetition to see it, and avoid short-term decisions that affect long term success.

I just had to weigh in to the string of posts. I hope my thoughts are helpful. If not, well, then, at least I got in a little self-therapy session in a public place…

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Wow, Zero. You sure are on a pessimistic roll.

A big thanks to Rafe for addressing Zero’s tech concerns. Rafe’s response was my assumption, but I’m comforted someone more tech-savvy weighed in. That still leave this statement though…

Now the question is: Do I hold the stock from Wednesday to Thursday. Or sell on Wednesday and buy back on Thursday.

Wouldn’t a better question be why you are even bothering with an investment that has only 5-10% upside versus 50% risk in the first place? Especially since it’s just a commodity product that will get crushed by competition anyway. Is it because even you have difficulty separating all your doomsday predictions?

For example, your call last March of another 20-30% drop when we had just about bottomed: https://discussion.fool.com/market-downturns-lead-to-phoenix-por…. My rough math puts most regulars up by at least that amount since then even after this recent carnage.

Or maybe your June 2020 call that valuations were going to drive us all into bankruptcy: https://discussion.fool.com/market-downturns-lead-to-phoenix-por…. That math’s a little tougher, but I’d take the over on the majority of regulars being up at least a double since then.

One of the good things about being here a while is you start to recognize in what scenarios some posters tend to chime in. One of the crappy things, however, is one of these days Zero will finally be right. I sure hope it’s not on MNDY, but who the heck knows? While the numbers and track record suggest something closer to BILL/DDOG/UPST than AMPL, there’s never any guarantees. I just figured with so many recent comments on separating signal from noise and doing your own due diligence, a bit more context might be appropriate for newer readers.

Good luck to everyone no matter how you end up making your MNDY bed. Just try your best to let your hard work and due diligence lead the way rather than a skittish market and the perpetual doomsayers that accompany it.

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Oops. If anyone really wants to see that 2020 thread, here’s the right link: https://discussion.fool.com/cheap-vs-expensive-a-truism-34534525….

If nothing else, Saul’s initial post kicking it off is well worth the read.

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DDOG was actually $155.50 going into earnings and a few % above that as of now. In any event, this type of analysis over a few trading sessions is not really going to sway most people on here, especially when a large chunk of losses the last few days is due to the most un-fundamental of reasons: geopolitics.

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I see it like this: +5% / +10% chance if they significantly beat estimates. on the other hand -50% risk if the forecast for next year is even 1 million below expectations (like Amplitude). Maybe it would be wise to sell at least a part before the earnings announcement and buy back the next day, if the earnings are no disaster?

ZeroHedge, that kind of post is plain old portfolio management and not what this board is for.

Saul

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By the way: I would look at things differently if I had at least a 10-20% profit buffer, i.e. if the stock in the portfolio was up 10% or 20%. But all shareholders in Monday are in the loss zone because it is at rock-bottom prices. So the previous loss can turn into a massive loss within one day. There have been many examples of this the last few days. Now the question is: Do I hold the stock from Wednesday to Thursday. Or sell on Wednesday and buy back on Thursday.

ZeroHedge,
Another portfolio management post that is starting to sound like you have ulterior motives. Please go take it to another board.
Saul

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The average gain of only 2.4% this quarterly season suggests: It’s not worth taking the risk this season to hold the stock on earnings announcement day, especially since we’re all at a loss on Monday.

Okay, so we all know that you are likely a short seller. No more.

Saul

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I feel obligated to correct this nonsense. Because he seems to be a short seller, he’s saying “It’s not worth taking the risk to hold the stock on earnings announcement day”, but then he’s quoting last Friday’s price after two days of heavy sell off because of war jitters, not the date after earnings day.

What was the price on the day of the earnings announcement, what was the last price on Friday? So what was missed for holding the stock on the day of the earnings announcement?… [Saul here: Notice how deceptive this was!]

DDOG
Closing price before quarterly results 174.6
Closing price Friday 159.02

Loss -9%

NET
Closing price before quarterly figures 115.96
Closing price Friday 95.87

Loss -18%

BILL
Closing price before quarterly figures 170.28
Closing price Friday 224.33

Gain 31%

UPST
Closing price before quarterly figures 109.11
Closing price Friday 130.05

Gain 19%

ZI
Closing price before quarterly figures 58.78
Closing price Friday 52.54

Loss -11%

Average gain 2.4%

The average gain of only 2.4% this quarterly season suggests: It’s not worth taking the risk this season to hold the stock on earnings announcement day, especially since we’re all at a loss on Monday.

Here are the corrected figures:

What was the price on the day of the earnings announcement, and what was the close the day after earnings? So what was missed for holding the stock on the day of the earnings announcement?

DDOG
Closing price day before quarterly results 155.5 (results were released before the markets opened)
Closing price after market closed 174.5

Gain 12%

NET
Closing price before quarterly figures 115.96
Closing price next day 104.92

Loss -10%

BILL
Closing price before quarterly figures 170.28
Closing price next day 231.70

Gain 36%

UPST
Closing price before quarterly figures 109.11
Closing price next day 148.01

Gain 36%

ZI
Closing price before quarterly figures 58.78
Closing price next day 56.22

Loss -4%

Average gain 14%

So the average gain of those five stocks the day after their respective earnings releases was 14%. That’s what you would have missed. The poster was trying to trick you by comparing the price before earnings with this Fridays close when all the markets were down because of war worries, and not having anything to do with the market’s response to their quarterly results.

Short sellers seem to always show up when we are near bottoms to urge you to sell, so they can buy to close out their short sales.

Saul

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<< Short sellers seem to always show up when we are near bottoms to urge you to sell, so they can buy to close out their short sales.. >>

Saul, do you really think this is true?

The vast majority of the float of these companies are held by either large institutional investors or insiders. I doubt very much that they are making their decisions based on what they read on a message board.

I believe there is no way that the combined buy/sell power of members of this board could move the price of any of these stocks on any given day. Would anyone really waste their time in that sort of futile effort?

Alan

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The vast majority of the float of these companies are held by either large institutional investors or insiders. I doubt very much that they are making their decisions based on what they read on a message board.

I believe there is no way that the combined buy/sell power of members of this board could move the price of any of these stocks on any given day. Would anyone really waste their time in that sort of futile effort?

So, looking at complaints around short sellers trying to force a price down with a grain of skepticism is always useful in my eyes. In the vast majority of cases, it’s not a conspiracy: it’s someone who legitimately is afraid. Or just feels as passionately against a stock as we often feel in favor of a stock. Also, just on principle, it’s often good to hear the opposing side. Even if it’s not an argument made in good faith, if it’s an argument that will influence other investors it’s good to know about it.

But, do I believe that we could move the price of a stock? And, as a larger question, would someone try to influence the price of a stock by posting to message boards? Absolutely. Monday has a relatively volume of 580,000. So, how much does it take to move the price? It depends on how elastic the market is. How many more buyers will there be at at a 1% lower price? 1% 2% 3%? For a tech stock I tend to think it’s fairly inelastic. It’s not like people are trying to buy Monday as a value stock based on the P/E. In fact, since many probably view it as a momentum stock, the more the price goes down the harder it may actually be to find buyers.

I also tend to believe that the vast majority of trades are “reactive”. Examples: HFT trying to outrace order low data, HFT trying arbitrage. Algorithms trying to make trades based on momentum. For that matter, human day traders with momentum and technical plays. Of that 580,000 volume, how much is long term buyers and how much volume is from short term traders reacting? I hypothesize that short term trades can have a huge magnifying effect on the buy or sell order from a longer term investor.

In fact the fact that the majority of shares are owned by institutions and insiders makes it MUCH easier to move a stock price. If the vast majority of shares are owned by people who can’t and/or won’t sell, then the universe of shares that can be persuaded to buy or sell by price swings is very low.

The point being that if the overall volume is 580,000, I personally believe the actual number of shares that need to change hands to influence the price is remarkably low. Even if it looks like there is a lot of market depth on a stock, those buys and sells can be move in literal microseconds if it looks like the price might shift.

And also remember, for every 1 person who posts on this board there are probably 50 who read. If Saul hypothetically posts “those earnings are terrible, I’m getting out” how many sell orders do you think that would trigger? And given the encouragement to be fairly concentrated, how much volume do you think that would trigger. And, remember, if this is a deliberate attempt to move the price, they won’t just post here: they’ll post in a lots of places. Once you write a hit piece, you can post the same content lots of places. This isn’t theoretical, “pump and dump” (and the reverse) are as old as the stock market.

So, that’s lots of words. But the real point is:

  • Should we listen to the bear case on our favorite stocks? Yes.
  • Can we affect the price of the stock, for a small cap stock? I’m sure we do sometimes. When combined with other investing boards? Absolutely.
  • Should we police the board from people trying to manipulate prices? Yes. It absolutely happens.

–CH

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I just happened to check the email associated with my fool.com address today. And I had a reply to my post about how, yes, this board could affect the price of MNDY. This email was absolutely incredulous saying that “I think you need to re-read your post” … “it’s fantastical. Sure, it may be tried on true micro-caps. But pretending this happens to multi-billion dollar companies is just one of the fairy tales we tells ourselves to keep us up at night.”

The email I received basically makes two assertions. One that the average volume is $110mm and that’s a huge amount of money and can’t possibly be affected by us. And, two, that 97% of the float is owned by institutions. That all of the daily trading is done by institutions and they couldn’t possibly be paying any attention to our message board. Let me address both of these points.

But, first, let me give one counter example. GME. GameStop is bigger than Monday.com in terms of market cap and MUCH bigger in terms of volume. Are you going to try and assert that GameStop hasn’t been pumped up by message boards? That the concept is fantastical? Saying that message boards affecting stock prices is a fairy tale is like asserting that toast is a fairy tale. It happens every day. Just look at GME, or AMC, or WISH.

But let’s come back to some of your other points. The author of this email stipulated that he could see thousands of sell orders being triggered by a significant change in Saul’s opinion. Well I strongly suspect that some of the more vocal posters here have six figures in MNDY. Let’s assume 20 of those sell orders average $250,000 each. And another 2000 at $5,000 each. That’s $15 million in orders. I didn’t check your math on the $110mm in daily trade volume, but if you are right, a few million dollars in sell orders trigger from this board would have a HUGE impact. Even if you are off by a factor of 100, that’s still enough to make a short term bump.

Similarly, you assert that institutional investors own 97% of the float and trigger most of the volume. First, I don’t believe the 97% number. But let’s assume it’s true. That would mean that retail investors only own $255mm worth of shares. And if we again assume that this board holds $15mm collectively, that’s a huge percentage. And institutional investors really don’t generate volume like you assert. Many can’t trade at all (e.g. index funds, ESOPs, insiders), but even the ones that can trade tend to have much longer holder periods than retail investors. So, the institutional investors don’t have to read this board for my thesis to work. In fact the more institutional owners there are, the less effective float there is.

I am not asserting that we have to stay up at night about this. I prefaced my entire original email with the point that this was not something to worry about except as good hygiene. But, yes, when trading outside the F500 you should take a look at the order book, you should use limit orders, and you should have common sense. But using internet disinformation as a weapon to manipulate the real world is just a fact of ordinary life these days. Pretending that it’s a fairy tale does no one any good. One of the reasons this board is so productive is because so much effort is spent by the board owners pruning it of nonsense.

–CH

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I had a reply to my post about how, yes, this board could affect the price of MNDY. This email was absolutely incredulous…

Hi Conehead,

Unfortunately you are very correct. Of course our board can move the market. We are probably one of the largest forums for the discussion of high-growth companies in the world. We have grown to where we must have tens of thousands of passive readers. It has, unfortunately again, made us more unwieldy than we used to be. The consequences of success.

The classic example: a rating site apparently pointed out in a table that Upstart had had higher rates of default in its most recent sets of loans. No one noticed this rating for a couple of weeks. Then JonWayne spotted it and wrote it up on our board (it created quite a stir if you remember). A few hours later the Wedbush analyst came out with a downgrade of Upstart based on the increased defaults. Couldn’t possibly be a coincidence as the information had been sitting there on this obscure site for a couple of weeks and no one had noticed it. Yes, analysts read our board.

The Motley Fool had over 10,000 boards last time I looked (granted some are fairly inactive). I just looked at the most recommended posters on the Fool and the top nine were from our board. Of the most recommended posts, four of the top five were from our board. Considering thousands of boards, that’s rather remarkable.

What you also pointed out is very true, that the institutionally held shares are inactive and the active float for some of these companies is a tiny part of the total float. Of course we can influence it. Which is why a short will come to our board and post four posts in a row, one right after another, saying “Sell Monday! Sell! Sell! Sell!” as that one did a couple of days ago, and I had to delete.

And yes, they do seem to show up at the bottoms. My reasoning is that they need to close out their short sales by buying back the stock, so they need some people to be selling so their buys won’t push the price back up before they have finished closing out their shorts. But that’s just my reasoning to explain why they tend to show up near the bottoms. What do I know?

Best,

Saul

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First: I’m not a short seller.

All I did was a recommendation, because this market is very harsh by the slightest miss in earnings or a slightly bad guidance.

Therefore I said, perhaps it’s responsible to reduce the position.

This was also after my shocking experience with Amplitude (had only a small 2% position)

Perhaps it’s also good from time to time to hear some other opinions.

Regarding the earnings announcement of MNDY:

I like the 2 new products, because it shows they innovate and they can reach a bigger audience with this 2 standalone tools/products.

I like also the partnership with KPMG. This should be good to win more bigger clients.

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