Now we have a very speculative thought: take stock of the MongoDB software manufacturer (Nasdaq: MDB), to profit from their rebound after a recent fall.
Growth potential and duration : twenty percent for 14 Months; eleven percent a year for fifteen years.
Why stocks can go up: they have dropped a lot in price.
How do we act: we take at the moment 270,02 $.
Our reflections are based on the analysis of the company's business and the personal experience of our financiers, but remember: doesn't mean, that the investment idea will work like this, how are we waiting. Everything, what we write, — these are forecasts and conjectures, but not a call to action. To hope for our reflections or not - it's up to you.
Analysis, for example this and this, testify to, that the accuracy of the prophecies of motivated prices is not great. And it's acceptable: there are always a lot of surprises on the stock exchange and clear forecasts are rarely realized. If the state of affairs were reversed, then funds based on computer algorithms would perform better than humans, but no matter how annoying it may sound, they work worse.
Because we do not try to build difficult models. The performance forecast in the article is the author's expectations. We indicate this forecast for guidance.: as with investing in general, readers decide for themselves, it is worth trusting the creator and focusing on the forecast or not.
What the company makes money on
Makes a platform for developers. In accordance with the annual report of the company, its revenue is divided into two sectors.
Subscription - eighty six percent. The sector's gross margin is seventy-four percent of its revenue. This is a subscription to use the company's platform. In this sector 47,9 % revenue comes from cloudy database service for MongoDB Atlas applications. Other 52,1 % is a subscription to other software.
Services - four percent. These are training and consulting services.. The sector is deeply unprofitable: the loss here is twenty-seven percent of the revenue.
The company also has free features - this is fundamental to our history..
Geographically, the company's revenue is distributed as follows:
- America - 61,2 %. Here, fifty-six percent of the company's revenue comes from the United States;
- Europe, Middle East and Africa - thirty percent, here ten percent of the company's revenue comes from England;
- Asian-Pacific area - 8,8 %.
The company is unprofitable.
Arguments in favor of the company
Fell perfectly. This year, the organization's securities have fallen in price by almost forty percent due to a trivial overhead - therefore, you can count on a rebound in shares after a fall.
Cost dynamics. In the concept behind Coursera, we talked about the rise in US organizations' spending on software and the expansion of digital infrastructure facilities in the US. I believe, what will be great from this and MongoDB, since its motivated audience in such conditions will be loaded with work.
Old school spirit. MongoDB is a widely popular company in narrow programming circles.. In addition, it has the highest revenue growth rates - completely in the spirit of a start-up. I think, that the combination of these 2 reasons will lead to an increase in the prices of the organization's securities: there are always a lot of those on the stock exchange, who fears "missing out on the new Microsoft". In this context, MongoDB looks like not the worst contender for the role of the new Microsoft..
And since software developers are paid well, and almost all of them have no time, no desire to read reports, I guess, that most of them will fall for the familiar name and invest in these shares “because I know and believe in this company”.
Competitiveness. In the field of databases, the main rivals of the company are Oracle., Microsoft, IBM, SAP и Amazon. And it's great, so that these are big companies with bottomless pockets. This greatly increases the ability, that MongoDB will be bought by one of them.
What can get in the way
Still not cheap. Own capitalization 16,52 billions of dollars, the company is worth almost twenty percent of its own motivated market - database software. At the same time she takes on it 0,71 % by revenue. I think, everyone will agree, that this is a somewhat cheeky appraisal of these shares, - why you should be mentally prepared for volatility.
Competitiveness and loss. Taking into account, that big companies are MongoDB's main rivals, and she is profitable, extremely possible option, in which rivals will begin to crush it and put it on the verge of ruin, to buy later even cheaper. In addition, the company is motivated to issue new shares., to finance its operations, - what, naturally, may have a negative impact on prices.
Startup raid just flies. Despite the brave level of revenue growth, the best years of this site in the back. The company has not received industry awards for a long time, and a huge number of users are satisfied with its free features. MongoDB is a solution for small start-ups, who do not have funds per person, who would be engaged in setting up information bases, and therefore they choose paid MongoDB services. However, how these companies grow, they have funds for their own specialist and paid functions are disabled as unnecessary. MongoDB Standard Client is a Small Startup, who needs to justify the financier, that development is in good hands. In addition, almost all the features of the MongoDB platform were adopted by its rivals., which reduces the possibility of buying the company by someone larger.
What is the end result
3 June the company publishes a report for this quarter. I don't really expect anything so special there., but, may be, due to the growth of software spending in the US, the company will lose something. In any case, we can take stocks already at the moment by 270,02 $, and then there are two options:
- wait for the price 325 $ and implement. This will be very less than the maximum values in history in 422,85 $ in February 2021 and fully achievable level during subsequent 14 Months;
- keep stocks in sorrow and joy for the next fifteen years in anticipation of, that the company will become a new IT giant. On a long distance, the possibility of buying a company by someone larger increases greatly..
