MongoDB, Inc. (NASDAQ: MDB) experienced a significant drop on Thursday, reflecting investor disappointment following its latest earnings report. The stock plummeted by over 7% during regular trading hours, falling from $333 to $310.
The after-hours session brought even more drastic declines, with MDB plunging by 26% to below $230, driven by a trading volume of nearly 3.8 million shares, highlighting substantial bearish sentiment.
MDB Earnings Report Highlights
The downturn was largely attributed to MongoDB’s underwhelming earnings release for Q1. While the company reported revenues of $450.6 million, surpassing the consensus estimate of $439.64 million, the market reacted negatively to the overall outlook.
CEO Dev Ittycheria noted, “MongoDB delivered solid Q1 results, highlighted by 32% Atlas revenue growth. However, we had a slower-than-expected start to the year for both Atlas consumption growth and new workload wins, which will impact the remainder of FY25.”
The company projected second-quarter earnings between 46 and 49 cents per share, falling short of the 58 cents estimate. Additionally, quarterly revenue is expected to be between $460 million and $464 million, below the $470.43 million estimate.
For the fiscal year 2025, MongoDB anticipates earnings between $2.15 and $2.30 per share, versus the $2.50 per share estimate, and full-year revenue in the range of $1.88 billion to $1.90 billion, below the $1.93 billion forecast.
Market Reaction and Future Prospects for MDB
Investors reacted sharply to these projections, indicating concerns over the company’s growth trajectory and profitability. Despite the negative sentiment, Ittycheria emphasized the company’s long-term potential, citing the large market opportunity and the role of AI in modernizing applications.
“We see a tremendous opportunity to win more legacy workloads, as AI has now become a catalyst to modernize these applications. MongoDB’s document-based architecture is particularly well-suited for the variety and scale of data required by AI-powered applications,” he stated.
However, insider activity has raised red flags, with substantial insider selling since July of the previous year and no insider buying, further fueling investor apprehension.
Conclusion
The steep after-hours decline of MongoDB’s stock reflects the market’s disappointment with the company’s Q1 performance and future outlook. While the company remains optimistic about its long-term prospects and the impact of AI on its business, immediate concerns about growth and insider selling are likely to weigh heavily on investor sentiment in the near term.