MDB Stock: Is it the right time to invest in MongoDB?

The ongoing information technology boom has spurred the need for effective tools for database management, and enterprises are turning to technology companies like MongoDB Inc. (NASDAQ: MDB) to integrate their data.

The fast-paced cloud migration and growing demand for backend infrastructure software across industries, especially during the virus-induced shutdown, have accelerated the adoption of MongoDB’s services. Of late, the company has been ramping up its cloud service to both partner and compete with top cloud providers in the market.

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Read management/analysts’ comments on quarterly reports

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Over the years, the New York-based multi-cloud database platform expanded its footprint in the market considerably, leveraging its flexible business model and innovations to the portfolio, especially the Atlas service.

The Atlas Power

Currently, the road ahead looks bright though the loss-making company’s turnaround prospects looked bleak in the early days of the pandemic. However, the management expects some of the headwinds to persist in the coming months. In what could be a major milestone, the MongoDB Atlas for Government, a fully-managed cloud-hosted database-as-a-service for the federal government, was recently approved as FedRAMP-Ready for Agency Authorization.

The elusive profit, even four years after MongoDB’s stock market debut, could be a concern for prospective investors. But, the unique offerings and strong adoption of the company’s solutions indicate the stock can bring handsome returns in the long term. MDB has been on an upward spiral for quite some time and reached an all-time high a few weeks ago, raising concerns that the stock is overvalued. The price moderated since then and the stock has become more affordable, which justifies analysts’ strong buy rating.

Q3 Report on Tap

The company is scheduled to publish its third-quarter results on December 6 after the closing bell. The consensus estimate is for a loss per share of $0.38, which is wider than the loss reported in the year-ago quarter. Analysts are looking for revenues of $205.16 million.

From MongoDB’s second-quarter 2022 earnings conference call:

“We are focused on increasing our sophistication on digital acquisition and product-led growth techniques to increase the top of the funnel and optimize mid-funnel conversion rates. This is an iterative process with a lot of experimentation that is yielding promising results. Turning to our product road map, we continue to invest both to extend our lead in the core database space, as well as to mature and grow our emerging products.”

Mixed Outcome

For the second quarter of 2022, the company reported a 44% jump in revenues to $198.7 million. It incurred a loss per share of $0.24 per share during the three-month period, on an adjusted basis, which is slightly wider than $0.22 per share reported last year. The company has surpassed 200 million cumulative downloads from its website. Despite the losing streak, the bottom-line beat estimates consistently in the past.

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MongoDB’s stock traded lower during Wednesday’s regular session, after closing the previous session slightly below the $500-mark. In the past six months, however, the stock gained about 72%, staying above its long-term average and often outperforming the market.