Here are my assumptions and extrapolations:
Revenue $88M (as per their guidance)
Whoa! I would dump MNDY from my portfolio immediately if I expected them to do $88M in revenue for the upcoming quarterly report. Are you seeing signs they might do 88M that I haven’t seen?
That would be a severe QoQ deceleration!
I am looking for at least 95M in revenue.
In any case I might as well chime into this thread too:
Here is my rationale for keeping MNDY at lower allocation in my portfolio (8% currently), versus others on the board who have it at 20%+.
Stock price, at the end of the day, is driven by supply/demand. If institutional investors are not really piling into MNDY over time, its valuation multiples will remain depressed, as they have been, since share lockup expired months ago. Relative to its peers at least. For example, the inferior ASAN has outperformed MNDY in valuation for reasons I can only assume is not only from CEO buying but the fact that it is US based, unlike MNDY.
Venture capitalists may also be selling since lockup expiry and keeping prices depressed, but we have no visibility into this as they are not required to file Form 4 (again, because MNDY is not US based).
And I believe another reason MNDY has fewer buyers for now is the perception that MNDY lacks growth durability. This is a possibly valid concern in the “longer run” versus my other positions such as DDOG or SNOW or NET or ZS. This is because MNDY faces fierce competition as time progresses (against ASAN, MSFT loop, Clickup, Notion, etc etc, there are dozens of them.), as project management tools are not difficult for new entrants to create and take market share. Meanwhile, Datadog, SNOW etc all have clear signs of outright market leadership already and the market has priced that in accordingly.
MNDY doesn’t have an apparent advantage strong enough to conquer its peers, for now, in my mind. Right now it is thriving in a temporarily greenfield landscape. Yes it is trying to distinguish itself with WorkOS and automations but ASAN is also moving to catch up and I am sure others too (https://techcrunch.com/2022/02/15/asanas-new-workflow-tools-… Today, the company announced Asana Flow, a new set of workflow tools that help move work in an automated way within and across teams.)
While MNDY can prove growth durability each quarter, we have to keep in mind, if the perception that they’ll slow growth down in the near future holds among skeptical institutions in those future quarters, no matter what they report, then its valuation might remain compressed versus its peers.
Yes, MNDY has picture perfect flawless numbers so far.
“Follow the numbers” is not everything, however. The narrative is also very important.
Institutions will believe what they want to believe and I sense they think MNDY lacks durable growth. They need to prove them wrong over time. While yes, this is a higher reward scenario if we think they will consistently outshine expectations, it also has higher opportunity cost risk and execution risk which is why I have kept my MNDY weighting at 8%.