I don’t own MongoDB at this time, but I still track it because it’s in the cloud/SaaS sector. It’s currently trading at a EV/Sales of 13 and during their earnings conference call yesterday afternoon, management just gave FY 24 revenue growth guidance of 15%.

Using our quick EV/S divided by fwd revenue growth, we get 0.86.

My threshold for cloud stocks is 0.40. So right now, MDB will remain on the watch list and I have no interest in buying shares.

When I sold Datadog (DDOG) before earnings in February, I did it because I feared a slowdown in cloud spending. We have now seen DDOG, SNOW, and MDB guidance confirming that thesis.

Analysts were expecting ~30% revenue growth next year for MDB, and management just came out with a 15% revenue growth forecast which is why the stock is down 12% pre-market.

I’ve received a lot of criticism for “trading” out of my cloud/SaaS positions and I understand that sentiment. However, I believe I made the right decision. Not because the stock prices are down but because I had a business-related thesis that has played out very quickly.

So now, I’ll monitor these companies, identify what I think are the best-of-breed, and patiently wait until I believe they’re undervalued.

MongoDB Q4 2023 Highlights

I’m trying to wrap my mind around how much of a positive impact the last 10 years of super-easy VC money, 0% interest rates, and the growth of crypto-related businesses had on some of these SaaS companies.

I think MDB was probably one of the biggest beneficiaries of unprofitable startups and crypto-companies and their forward revenue guidance implies the bottom completely fell out.

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