MongoDB crushed analyst expectations in last night’s third-quarter report, but the stock is plunging anyway. Here’s why.
Ultramodern database software specialist MongoDB (MDB -16.92%) had a bad market day on Tuesday. The stock was down 13.9% at 11:45 a.m. ET despite an impressive third-quarter report. The stock initially jumped on the earnings news, but MongoDB investors quickly backed down a few minutes later when they noticed that the company also announced a management change.
Strong results overshadowed by an unexpected management change
First things first: MongoDB’s third-quarter sales grew 22% year over year, landing at $529 million. Earnings came in at $1.16 per share, up from $0.96 per share in the year-ago quarter. Your average analyst would have settled for earnings of roughly $0.67 per share on sales near $498 million. So far, so good. MongoDB’s stock rose more than 10% in the first few minutes of after-hours trading.
But the gains didn’t last. MongoDB’s stock chart dipped sharply lower when investors noticed the leadership update. Longtime CFO and COO Michael Gordon will leave his MongoDB posts at the end of January, sticking around in an advisory role until a permanent replacement gets comfortable with the job.
Is MongoDB stock a buy now?
Despite several analysts prodding for more info on the earnings call, Gordon didn’t say whether he’s retiring or taking a new job somewhere else. Either way, MongoDB is losing an important C-suite name after nearly 10 years of service. It’s easy to see why investors are nervous about this big change, especially since Gordon’s role involves both the company’s financial management and day-to-day operations. His successor (or successors, if the COO and CFO roles are split in 2025) will have some big shoes to fill.
At the same time, it’s easy to see how Gordon’s exit announcement was missed for half an hour. Squeezed into a long list of strong financial results and interesting business advancements, the “executive leadership update” may look like a small point at first glance.
On a grander scale, MongoDB’s stock had traded sideways for years despite soaring sales and shrinking bottom-line losses. The stock was probably overvalued five years ago, but the price-to-sales ratio is getting quite comparable to larger and more profitable (but slower-growing) database rival Oracle (ORCL -6.67%).
Today’s price drop looks like an invitation to take a closer look at this promising growth stock. If nothing else, the mini-crash erased the price premium MongoDB earned from the Microsoft (MSFT -0.60%) partnership it announced last month.
Anders Bylund has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Microsoft, MongoDB, and Oracle. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
