MongoDB is one of the software names that has seen significant price decline. In the last 4 years it had seen 44%, 76%, 57% declines. So the stock moves around a bit 
In the last couple of weeks again rallied 16%. So I am looking into this name for a rebound trade.
What caused the sharp selloff is MDB has seen revenue decline and guidance. The below table is their 5 year revenue growth, significant growth!!!
The below table is the last 5 quarters of growth. Ouch. Note, the quarterly is q-o-q numbers and not y-o-y comparison. The reason is to show the growth has stalled and even declined.
Mongo managed to grow faster than their sub-markets, now the growth is slowing. Every company goes through the transition from hyper growth to steady growth, growth challenges, but the abrupt nature of the deceleration is alarming, i.e., they are essentially dropping from 30% growth to 12% growth (High end of guidance is $1.9 B) . So naturally the stock price reacted to that news.
Now, database market is huge within software, $81 B, and it is expected to grow at 13%. Different sub-markets (on-prem vs cloud, relational vs others, OLTP vs OLAP) are growing at different rates.
Mongo is exposed to submarkets that are expected to grow 10%+ to 20% (Cloud OLTP, NoSQL) for the next 5 years. Also, it doesn’t look like there are any new entrants taking market share from MDB, in fact MDB’s top competitors MSFT and AWS are ceding market share in the NoSQL submarket.
Separately, ORCL which used to cede market share due to cloud adoption, stopped the bleeding because they are now gaining market share in Cloud, of course that is reflected in their stock price
So mongo’s growth challenges are company specific execution risk rather than the market saturation, or major category shift or due to competition. There is a significant “mindshare” amongst developers, it is the 3rd preferred DB for developers (behind Postgres, Redis), and commands 80%+ favorability amongst developers. Developers are important for product adoption.
It is a chicken and egg problem, if there are not enough developers developing products, solutions, the product adoption will not accelerate. Unless the product adoption increases not enough people will be willing to learn.
Market share in NoSQL (MSFT- 34%, AWS-28%, MDB-6%). However, if you compare features MDB is far superior to AWS DynamoDB, yet AWS commands much higher market share. Competition from hyperscalers (or cloud platforms) is a huge risk for MDB. AWS, AZURE, GCP are center of gravity as cloud providers. They can slowly overtime catch-up on the features and because of their entrenched position in the company’s IT spend and mindshare with IT leadership, it is easy to gain/ maintain market share. I have seen this playout for IBM’s, and Oracle because of their presence in the data center. But for now, MDB is not losing market share to them. However, this is a long-term risk.
Basically, their addressable market is still growing and MDB has lot of room to grow. There are no new players taking market share. Yes, AI has taken lot of enterprise IT budget but that is already showing signs of reverting.
Yes, many companies have realized/ realizing they cannot use LLM out of the box, and they may need to train them with their, company’s proprietary data, there are lot of literature on RAG (Retrieval-augmented generation), basically when you query the query is intercepted by an embedding module that sends the query to company data source and feeds that output to LLM. From McDonald to many companies who rolled out AI are scaling back or canceling as the results are not meeting their expectation. They will not abandon, but will slow down.
So the spend on the rest of the software will pick up and MDB may see the growth.