MongoDB stock got a rating of outperform as a Wall Street analyst initiated coverage on the database software company Friday, but shares fell along with the market.
MongoDB (MDB) is disrupting the $30 billion operational database software market, which has seen little innovation for decades, William Blair analyst Jason Ader said in a note to clients.
“The main drivers of disruption have been cloud computing and open-source software — which together have revolutionized how applications are built, where they are located, and how they interact with their underlying data,” Adler wrote.
MongoDB has an open-source software strategy with a software-as-a-service business model. It uses a subscription-based model for revenue.
MongoDB stock followed the market down Friday, falling 1.2% to close at 152.76 on the stock market today. The stock hit a record high of 154.64 on Wednesday.
MongoDB’s Double-Digit Growth
The company reported fourth-quarter earnings after the market close on March 13 that smashed expectations. MongoDB stock catapulted 25.6% the following day as several analysts raised their price targets. Fourth-quarter revenue jumped 71% to $85.5 million. That maintained a string of double-digit growth per quarter going back four years, though the company has yet to show a profit.
The company held its initial public offering in October 2017, pricing shares at $24. MongoDB stock jumped 34% on its first day of trading.
It added 5,100 new customers in the fourth quarter, raising the total to 13,400.
“MongoDB is investing aggressively to win a footprint in a large, fast-evolving space, and we expect strong top-line growth to be sustained for the next several years,” Adler wrote. He does not expect profitability to arrive for a few years.
“We believe MongoDB can become a multibillion-dollar revenue business over time,” Ader said. “The company has clearly established critical mass with best-of-breed technology and execution, and has separated itself from the crowded field of upstart database vendors.”
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