{"id":36980,"date":"2023-07-17T20:35:17","date_gmt":"2023-07-18T00:35:17","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/mongodb-stock-is-up-11800-since-its-ipo-generative-ai-could-send-it-higher\/"},"modified":"2023-07-17T20:35:19","modified_gmt":"2023-07-18T00:35:19","slug":"mongodb-stock-is-up-11800-since-its-ipo-generative-ai-could-send-it-higher","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=36980","title":{"rendered":"MongoDB Stock Is Up 11,800% Since Its IPO. Generative AI Could Send It Higher"},"content":{"rendered":"
\n

Can a new entrant win in a market dominated by huge incumbents? The answer is yes — if and only if its product delivers so much more value than rivals\u2019 that customers are better off switching to the upstart\u2019s product.<\/p>\n

That\u2019s what New York City database provider, MongoDB
\n MDB
\n <\/fbs-ticker>, has done.<\/p>\n

After soaring some 11,800% since its October 2017 IPO, demand from customers investing in generative AI could help fuel a continued rise in MongoDB\u2019s stock.<\/p>\n

MongoDB\u2019s Rapid Growth Is Spurred By Compelling Product In Huge Market<\/h2>\n

MongoDB beat expectations and raised guidance in its most recent quarter. With its small market share in a large, growing market, the database company is benefiting from a product that customers find more compelling than rivals\u2019.<\/p>\n

<\/fbs-ad><\/p>\n

MongoDB Beats And Raises In Q1 2024 (Q1 Of FY 2023)<\/h3>\n

In early June, MongoDB reported growth for the quarter ending April 30, 2023 after a disappointing result in the previous quarter. In Q1 2024, revenue increased 29% from the prior quarter to $386 million \u2014 $21 million above analyst expectations \u2014 while MongoDB added 2,300 net new customers \u2014 the most new adds in two years, according to Investor\u2019s Business Daily<\/em>.<\/p>\n

MongoDB also raised its 2024 outlook for revenue \u2014 forecasting 15% top-line growth \u2014 and operating income.<\/p>\n

In June, the database provider said in FY 2024 it \u201cexpects more than $1.5 billion in revenue [analysts expected $1.51 billion] and in excess of $110 million in operating income,\u201d noted IBD<\/em>. In the previous quarter, IBD<\/em> cited a macroeconomic slowdown and weaker customer demand for its lower outlook.<\/p>\n

MongoDB\u2019s Competitive Position<\/h3>\n

MongoDB offers a product that appeals to customers more than competing products.<\/p>\n

MongoDB\u2019s product is easier for customers to tailor to their multicloud computing environments. Its program helps developers \u201cbuild and design applications in a fast, flexible and scalable manner and enables them to integrate powerful AI features,\u201d noted IBD. Moreover, MongoDB\u2019s platform works with three cloud services leaders \u2014 AWS, Azure, and Google Cloud.<\/p>\n

MongoDB\u2019s legacy rivals \u2014 Microsoft
\n MSFT
\n <\/fbs-ticker> SQL Server, Oracle\u2019s
\n ORCL
\n <\/fbs-ticker> Database, and IBM\u2019s DB2 \u2014use Structured Query Language to build tabular databases. These legacy products are not as appealing to customers because these off-the-shelf products are more difficult to customize, Ivan Feinseth, director of research at Tigress Financial Partners, told IBD<\/em>.<\/p>\n

To be sure, MongoDB aims at a large market \u2014 growing at a nearly 14% compound annual rate to $136 billion by 2027, according to IDC<\/em>. Yet its current share is small. Michael Gordon, MongoDB’s COO and CFO
\n CFO
\n <\/fbs-ticker>, said the company\u2019s market share is approaching 2%.<\/p>\n

Gordon stated MongoDB\u2019s product is poised to gain more market share because it helps companies incorporate generative AI into their business strategies. He told IBD, \u201cMongoDB Atlas is the ideal platform to reach that goal.\u201d<\/p>\n

Unlike incumbents, Atlas uses NoSQL \u2014 \u201ca document-based data model that creates unstructured, non-relational data documents.\u201d In a recent note to investors, Jason Ader and Sebastien Naji of William Blair wrote MongoDB has significant growth potential since fewer than \u201c40% of the Fortune 500 are MongoDB customers today.\u201d<\/p>\n

Why MongoDB\u2019s Value Keeps Growing<\/h2>\n

MongoDB\u2019s success springs from a simple idea: Years before the company went public its product worked better at a fraction of the price of Oracle\u2019s MySQL. That superior customer value proposition has propelled MongoDB\u2019s growth before and after its IPO.<\/p>\n

In October 2013, then-CEO Max Schireson \u2014 who left in 2014 to make way for current CEO Dev Ittycheria \u2014 told me customers loved MongoDB\u2019s value proposition. \u201cWe are much more flexible \u2014 we make it easier for developers to handle many different kinds of unstructured data such as emails, tweets, videos, and other social media. And we run on commodity servers,\u201d he said.<\/p>\n

When you take into account the full cost to a company, MongoDB offered an irresistible bargain. Schireson said, \u201cWe believe that the cost of the software should equal that of the hardware. We typically charge $5,000 per server per year for the software to run on a server that costs about $5,000. Our competition charges hundreds of thousands of dollars per server-year plus $50,000 a year in maintenance and their software runs on $10,000 servers.\u201d<\/p>\n

MongoDB grew considerably between 2011 \u2014 when Schireson became CEO \u2014 and May 2017 \u2014 when I last spoke with Ittycheria.<\/p>\n

By May 2017, MongoDB\u2019s payroll had more than doubled and its customer count had soared five-fold since 2011. Ittycheria told me in May 2017, \u201cWe now have over 3,000 customers and are approaching 800 employees. We are winning market share because we increase developer productivity (at $250,000 a year they are very expensive), we offer high performance at scale, our product is fault-tolerant, it runs anywhere, and it costs less.\u201d<\/p>\n

I spoke with two MongoDB customers that month. One of them, Sam Broe, Chief Product Officer, at Bond \u2014 a maker of \u201cdigital products that enable customers to send beautiful, thoughtful, handwritten correspondence from their computer or phone\u201d \u2014 told me Bond switched in March 2016 to MongoDB after four years of using MySQL.<\/p>\n

Four years after adopting Oracle\u2019s product, MySQL could not handle the rapid increase in the amount of data added daily to Bond\u2019s system \u2014 but MongoDB\u2019s product did the job. As Broe noted, Bond\u2019s \u201cplatform approach requires us to have an easily scalable, rapidly deployable, highly available storage solution. That\u2019s why we\u2019re sticking with MongoDB.\u201d<\/p>\n

MongoDB has grown considerably since going public in October 2017. As of July 2023, it had 4,527 employees, $1.3 billion in revenue, and 43,100 customers. Between its IPO and July 14, its stock price has increased from $30 a share at a 56% average annual rate to $400.<\/p>\n

Customers still have a favorable view of MongoDB\u2019s Atlas product. A total of 1,190 customer reviews tracked by Gartner Peer Insights<\/em> give Atlas 4.4 out of five stars.<\/p>\n

For example, one customer wrote, \u201cMongoDB’s architecture is designed for horizontal scalability, making it an ideal choice for applications that require high availability and performance. With MongoDB’s built-in sharing capabilities, data can be distributed across multiple servers, allowing seamless scaling as the application grows. It ensures your application can handle increased traffic and data volume without sacrificing performance or availability.”<\/p>\n

MongoDB is still taking customers from Oracle. As Ittycheria said on a June 1 conference call with analysts, China Mobile moved a service for sharing billing information with customers from Oracle to MongoDB, \u201cleading to an 80% performance increase and reducing the number of underlying servers from 50 to 12,\u201d according to CNBC<\/em>.<\/p>\n

Where MongoDB Stock Goes Next<\/h2>\n

The 22 analysts offering 12-month price forecasts for MongoDB have a median target of $420.50. The median estimate represents a 5.49% increase from the last price of 398.63, according to CNN Business<\/em>.<\/p>\n

MongoDB stock is outpacing the NASDAQ
\n NDAQ
\n <\/fbs-ticker> considerably so far this year — up a whopping 109% compared to 36% for the tech-heavy index.<\/p>\n

Analysts see the run up in MongoDB\u2019s stock as almost fully reflecting its value.<\/p>\n

For those considering an investment in this company, it should be a concern that MongoDB\u2019s forecast of 15% 2024 revenue growth is so much slower than its 47% average revenue growth since 2021.<\/p>\n

However, when it next reports its quarterly results, if MongoDB exceeds its modest forecast and raises guidance, I think the stock will rise further.<\/p>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Can a new entrant win in a market dominated by huge incumbents? The answer is yes — if and only if its product delivers so much more value than rivals\u2019 that customers are better off switching to the upstart\u2019s product. That\u2019s what New York City database provider, MongoDB MDB , has done. After soaring some […]<\/p>\n","protected":false},"author":1,"featured_media":36981,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-36980","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-markets","tag-featured"],"yoast_head":"\nMongoDB Stock Is Up 11,800% Since Its IPO. Generative AI Could Send It Higher | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Can a new entrant win in a market dominated by huge incumbents? 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