During past few weeks, many people sold out MNDY because of share price action and expressed doubt about the bull thesis for MNDY because “the stock went up less during green day and went down more during red days than others”. Seriously, I saw at least few people mentioned this. This is momentum investing. This is not how we invest on this board.
“Momentum investing is a system of buying stocks or other securities that have had high returns over the past three to twelve months, and selling those that have had poor returns over the same period.”
We focus on business results. We don’t sell out a stock simply because the stock went down more and went up less than others in the short term. If the business continue to perform well, the stock will catch up to business results.
BILL.com is a great example, during Jan 24 intraday low, BILL was trading at $144.58. I was at -40% paper loss from my cost. The chart looked very scary. Landslide decline from $342 all the way to $144. I didn’t see any major trouble for BILL to justify such huge decline so I held steady. As transaction fee growth has been extremely steady for the past 3 years and the huge potential SMB market. All metrics are growing nicely. After earning, it’s up 36%. I am not saying MNDY will see the same jump in share price. I don’t guaranteed it either but so far I don’t see anything wrong with MNDY business so there’s no need to panic or self-doubt.
In fact, MNDY stock performance is not that far down than other great companies.
From: 11/9/2021 To: 2/3/2022
Stock price change:
MNDY: -59.35%
BILL: -50.25%
NET: -52.76%
DOCN: -53.98%
SPT: -57.07%
MNDY was only down 6.6% more than NET. Is that a big deal?
There are many factors to influent short term stock price movement maybe because it’s new IPO and not many index funds include it so it has less correlation with overall market. Business result is certainly not one of them. Did all those companies suffered 50% business decline? Nope!
On last earning call:
“
Our no-code automations and integrations are used by the vast majority of our customers. 100% of our enterprise accounts use them, while 88% use more than 50 different automations. Over the past year, our customers have automated over 900 million actions using our platform.
Our exceptional third quarter results are further proof that our customers are seeing the value of using our Work OS”
“Yes. And if I can support what Eliran is saying, it’s Roy, then the plans we have for next year are going to challenge the revenue growth, but we can’t predict. But we have big plans for next year.”
The keyword is: challenge
Does that mean MNDY is in trouble and needs to feel desperate?
MNDY is already doing great vs others so that means they have big plans to do even better in 2022.
Who should be worried? MNDY or ASAN or SMAR?
As I said before, it’s rare for a tech company be a monopoly.
Most of time, there’s a market leader and other slower growing companies. It’s winner takes all. See knowledge base on why SaaS companies focus on spending a lot on sales and marketing and acquire as many customers as possible. That only works if product is good. If not, customer will cancel the subscription.
**MNDY End Date MNDY/ASAN revenue MNDY/SMAR Revenue**
9/30/2021 82.75% 57.40%
6/30/2021 78.91% 53.62%
3/30/2021 76.91% 50.36%
12/30/2020 73.28% 45.59%
9/30/2020 72.31% 43.06%
6/30/2020 70.09% 39.98%
3/30/2020 66.46% 37.31%
12/30/2019 61.86% 33.89%
9/30/2019 55.53% 29.51%
6/30/2019 51.52% 26.32%
MNDY has been growing steadily within a small range. It’s unlikely that growth will fall off the cliff simply because MNDY went IPO’ed!
Rapidly improving sales efficiency. Steady hyper revenue growth and customer growth of 80 to 90% while S&M expense is trending down. It’s still increasing but not as fast as revenue growth.
**Sales and marketing as percentage of revenue:**
**Date S&M/Revenue**
9/30/2021 81.20%
6/30/2021 86.46%
3/30/2021 106.92%
12/30/2020 113.57%
9/30/2020 135.85%
6/30/2020 108.72%
2020 118.63%
2019 151.28%
Earning release is 2 weeks away: Feb 23.
Company guided 4.79% QoQ 2 quarters ago and they beated it by 12.16% with 17.5% QoQ.
They guided 4.82% QoQ for this quarter. It’s a slight improvement. My guesstimate: actual QoQ 18% to 20%.
Notice how close are the two guidance ? It means MNDY busines is extremely stable as for most SaaS.
It means the management is seeing slight aceleration in revenue growth.
Many people focus on YOY. It’s not a good number to look at. It’s both looking at rear view mirror and it’s also a delay signal. For example, ZM is decelerating rapidly but YoY is still looking good. That’s many said ZM is still doing great because YoY is good but it’s not looking at current business momentum.
