MongoDB Nasdaq:MDB 2024 has been a tough year, with shares down 40% as of the December 26 close. However, Wall Street analysts seem to see a light at the end of the tunnel for this technology stock. Of the 24 price targets released in December, the average suggests an upside for the stock of 35%. Below, I’ll break down Mongo’s product, the developments that have sent the stock down this year, and explain why some are so bullish on this name.
MongoDB: Intuitive and scalable database management
MongoDB today
(As of 05:45 PM ET)
- 52 week range
- $212.74
▼
$509.62
- Price target
- $366.14
MongoDB runs database management software. The main difference between the software is that it uses a document-oriented data model. This differs from older database systems that used relational data models. They store information in tables. The best way to understand the benefit of this is through an example.
An e-commerce company takes great care in storing and using the data it has about its customers. They can use the information to provide customers with product recommendations, which can lead to increased sales. However, the data a company has on each customer can vary widely. Perhaps a customer has just created an account and has only entered their name and date of birth. Another customer may have made hundreds of purchases, signed up for a rewards program, and filed a warranty claim.
In the relational model, one table stores personal information, and another stores purchase or warranty data. Collecting all the data related to a single customer can be time consuming and computationally expensive with increasing complexity. In addition, a company must determine in advance any potential category of data it may collect. This makes the system rigid and requires system-level modifications to the database schema which can be disabling.
In contrast, MongoDB stores all information for a single customer in a single document or profile. This document can store a small or large amount of information that the company owns. Businesses can add new categories as needed for a single customer. This increases efficiency in database maintenance and makes targeting individual customers easier.
The company’s main offerings are MongoDB Atlas and MongoDB Enterprise Advanced. They do the same things, but MongoDB runs Atlas for customers. The other option is for large companies. They manage the system themselves, allowing for greater customization. In 2023, the systems accounted for 66% and 26% of total revenues, respectively.
Poor Q1 guidance has MongoDB set for a tough rest of the year
The company’s stock price has fallen after several of its previous earnings releases this year. The reaction after the first quarter results of fiscal year 2025, which were announced in May, was particularly negative. The company saw light depreciation on Atlas, leading to a significant reduction in its full-year earnings guidance. Atlas customers pay more the more they use the system. MongoDB refers to this as consumption, and it directly impacts revenue.
MongoDB is trading 52% below its 52-week high reached in early February, as of the December 26 close. Most of this has come due to the severe contraction in its valuation multiples. The company’s price-to-earnings (P/E) multiple has fallen 56% from a peak of nearly 180 times. However, it is still trading at an impressive 79x.
Strong case for MongoDB’s return in 2025
MongoDB stock forecast today
$366.14
53.62% upModerate purchase
Based on 29 analyst reviews
| High expectations | $430.00 |
|---|---|
| Average expectations | $366.14 |
| Low expectations | $220.00 |
MongoDB stock forecast details
The only thing that seems to hurt Mongo in 2024 is that companies are directing more spending towards investments in AI, rather than spending in Mongo. However, there has been much talk about the lack of game-changing AI applications despite huge investment. This could start to shift in 2025. Ultimately, if the AI revolution is truly going to happen, AI-powered use cases will need to store and access massive amounts of data.
This is where MongoDB comes into play. As AI becomes more widely used, demand for database software to manage that information must increase. Hence, moving from investing in AI to implementing AI would help Mongo’s business. The company’s management continues to stress that its database is well-positioned to support AI workloads.
An important aspect of MongoDB’s long-term growth opportunity is that almost every industry uses its services. This gives the company the ability to benefit from the spread of AI applications throughout the economy. So the total addressable market becomes huge if the belief is that AI will change every part of the economy.
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