MongoDB NASDAQ: MDB 2024 has been a tough year, with shares down an excruciating 40% as of the close on December 26th. However, Wall Street analysts appear to see light at the end of the tunnel for these tech stocks. Among the 24 price targets released in December, the average indicates a 35% upside potential for the stock. Below, I’ll discuss Mongo’s product, the events that led to the stock’s decline this year, and why some are so bullish on the name.
MongoDB: Intuitive and Scalable Database Management
MongoDB today
(As of 3:09 pm ET)
- 52 week range
- $212.74
▼
$509.62
- Target price
- $366.14
MongoDB uses database management software. The main difference between the software is that it uses a document-oriented data model. This is different from older database systems, which use relational data models. They store information in tables. The best way to understand the usefulness of this is with an example.
An e-commerce company is very interested in storing and using data about its customers. They can use this information to make personalized product recommendations to customers, potentially increasing sales. However, the data a company has on each customer can vary greatly. One customer may have just created an account and provided only their name and birthday. Another customer might have made hundreds of purchases, signed up for a rewards program, and filed a warranty claim.
In a relational model, one table will store personal information and another table will store purchase or warranty information. Aggregating all the data for a single customer can be time-consuming and computationally expensive as complexity increases. In addition, the company must determine in advance any possible category of data it may accumulate. This makes the system rigid and requires system-wide database schema changes, which can lead to failures.
In contrast, the MongoDB system stores all information about a single customer in a single document or profile. This document can store as much information as the company has. Companies can add new categories as needed for a single customer. This increases the efficiency of database maintenance and makes it easier to target individual customers.
The company’s main offerings are MongoDB Atlas and MongoDB Enterprise Advanced. They do the same thing, but MongoDB runs the Atlas system for clients. Another option is for large enterprises. They manage the system themselves, which provides greater customization options. In 2023, systems accounted for 66% and 26% of total revenue, respectively.
Poor Q1 guidance sets MongoDB up for a tough rest of the year
The company’s share price has fallen since the release of many of its past earnings reports this year. Reaction following first-quarter fiscal 2025 results released in May was particularly negative. The company saw slight consumption of Atlas shares, leading to a significant reduction in its full-year earnings forecast. Atlas customers pay more the more they use the system. MongoDB calls this consumption, and it directly affects income.
MongoDB is trading 52% below its 52-week high reached in early February as of the December 26 close. This was largely due to a sharp decline in valuation multiples. The company’s forward price-to-earnings (P/E) ratio has fallen 56% from a peak of nearly 180x. However, it is still trading at an impressive 79x.
Bullish Case for MongoDB’s Return in 2025
MongoDB Stock Forecast Today
$366.14
Growth potential 56.12%Moderate purchase
Based on ratings from 29 analysts
| High forecast | $430.00 |
|---|---|
| Average forecast | $366.14 |
| Low forecast | $220.00 |
MongoDB Stock Forecast Details
One thing that seems to hurt Mongo in 2024 is that enterprises are directing more money toward AI investments rather than towards Mongo. However, despite huge investments, much has been achieved due to the lack of truly game-changing AI applications. The situation may begin to change in 2025. Ultimately, if the AI revolution does come to fruition, AI use cases will require storing and accessing massive amounts of data.
This is where MongoDB comes to the rescue. As artificial intelligence becomes more widely used, the demand for database software to manage this information should increase. So the shift from investing in AI to applying AI should help Mongo’s business. The company continues to emphasize that its database is well suited to support artificial intelligence workloads.
An important aspect of MongoDB’s long-term growth opportunities is that almost every industry uses its services. This gives the company the opportunity to take advantage of the proliferation of artificial intelligence applications throughout the economy. So the total addressable market is huge if we believe that AI will change every part of the economy.
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