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monday.com (MNDY) has drawn fresh attention after a steep share price pullback, with the stock showing negative returns over the past month, past 3 months, year to date, and past year on a total return basis.
See our latest analysis for monday.com.
At a share price of US$72.38, monday.com’s recent 7 day share price return of a 26.14% decline and 1 year total shareholder return of a 77.27% decline point to fading momentum after a tough stretch for investors.
If this sharp pullback has you reassessing your watchlist, it could be a good moment to look across the software and AI space. You can use our screener of 57 profitable AI stocks that aren’t just burning cash as potential comparison points.
So with the share price under pressure and some measures suggesting a discount to estimated value, is monday.com now trading below what its fundamentals imply, or is the market already factoring in its future growth potential?
With monday.com closing at $72.38 against a most-followed fair value estimate of about $235 per share, the narrative sees a wide gap between price and fundamentals. It is built on a detailed view of how its product mix and customer base could evolve over time under a 10.71% discount rate.
Multi product strategy, with accelerated growth in CRM and Service verticals, expands total addressable market and drives more cross sell/upsell opportunities, increasing both seat expansion and average deal size translating to higher enterprise revenue and durable earnings growth.
Want to see what kind of revenue ramp and margin profile sit behind that valuation gap? The narrative leans on compounding top line growth, firmer profitability, and a future earnings multiple more commonly associated with premium software names.
Result: Fair Value of $235 (UNDERVALUED)
Have a read of the narrative in full and understand what’s behind the forecasts.
However, there are pressure points to watch, including heavier spending on sales and marketing and slower small business customer additions that could challenge the long term growth story.
Find out about the key risks to this monday.com narrative.
While the narrative and our model suggest monday.com is trading below fair value, its P/E of 31.4x is higher than the US Software industry at 26.4x, the peer average at 29x, and our fair ratio of 20.9x. That richer multiple points to valuation risk if growth expectations cool further.
