We came across a bullish thesis on Monday.com Ltd. (MNDY) on Rijnberk InvestInsights’ Substack by Daan Rijnberk and Oliver | MMMT Wealth. In this article we will summarize the bulls’ thesis on MNDY. MNDY Technologies, Inc. share was trading at $263.13 as of Sept 16th.
A close-up of a computer monitor with an open work management platform software.
Monday.com (MNDY) is gaining significant attention in the SaaS sector due to its disruptive Work OS platform, which enables businesses to create customizable work management solutions. Founded in 2012, this innovative company has a market cap of $13 billion and serves over 225,000 customers across 200 countries, including 2 million monthly active users. Originally developed as a collaboration tool, Monday.com has expanded its capabilities to cover a wide range of enterprise needs, offering solutions for CRM, HR, and software development. Its platform’s adaptability is one of its key strengths, with offerings categorized into Monday CRM, Monday Dev, and Monday Work Management, allowing businesses to handle everything from lead tracking to project management.
Monday.com’s competitive advantage lies in its ability to cater to both small and medium-sized businesses (SMBs) and large enterprises, positioning itself as a more flexible alternative to traditional software solutions. Its product offerings are praised for their ease of use, flexibility, and scalability, making Monday.com a leading player in the collaborative work management industry. The company has achieved impressive revenue growth, with a three-year CAGR of 35.3%. Despite posting a negative net income margin in previous years, Monday.com turned a profit in Q2 2024, reporting a net income margin of 6%. Its free cash flow margin of 28% in FY23 further underscores its financial strength, and its status as a “rule of 60” company speaks to its operational efficiency.
Looking ahead, Monday.com’s growth prospects are substantial, with projected EPS growth of over 30% CAGR over the next four years. The total addressable market for its solutions is expected to reach $150 billion by 2026, providing ample room for further expansion. Its innovative platform and strong financial performance have fueled customer acquisition, particularly among larger enterprises. Although shares are currently trading at a 13.5x sales multiple, a recent surge following its Q2 earnings has made the stock more expensive. With shares up 40% year-to-date and 55% over the past 12 months, Monday.com continues to outperform expectations. While the opportunity is considerable, some caution is warranted given the recent price appreciation, and potential investors may find a more compelling entry point if the stock dips to the $220-230 range.
Monday.com Ltd. is also not on our list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 43 hedge fund portfolios held MNDY at the end of the second quarter which was 46 in the previous quarter. While we acknowledge the risk and potential of MNDY as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than MNDY but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.
