MongoDB (MDB) reported Q3 2020 earnings results after the market closed on December 9th. Overall, the results were strong and exceeded expectations. This drove an initial spike in share price, which has receded through the day. This performance provides a great example of why investors need to maintain a long term perspective with software stack companies. Let’s dive into the results.
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Dollar Based Net Expansion Rate (DBNER) is a critical metric to track for software stack companies. Companies with consistently high DBNER’s will grow revenues faster than their counterparts and experience significant stock price appreciation. DBNER also provides insight into a software stack company’s competitive moat and its pricing power.
Continue readingDate of Recommendation: Nov 19, 2019 Closing Stock Price: $140.99
MongoDB (MDB) stock should be considered for long term investment. Based on my characteristics for a successful software stack company, I expect MongoDB to grow significantly over the next 5 years. This will be driven by their rapidly expanding product offering in an enormous addressable market. Their database product is developer friendly and represents a popular choice for start-ups. MongoDB has strong developer evangelism and is the default database component in the introductory software stack taught at most coding bootcamps. Their cloud-first Atlas product is rapidly gaining share and provides a vendor-agnostic solution. The pace of enterprise migrations is increasing as MongoDB expands into adjacent use cases. I expect the stock price to exceed $490 within the next 5 years.
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