📝 usncan Note: Buy, Sell or Hold Monday.com Stock?
Disclaimer: This content has been prepared based on currently trending topics to increase your awareness.
CANADA – 2025/08/12: In this photo illustration, the monday.com logo is seen displayed on a smartphone screen. (Photo Illustration by Thomas Fuller/SOPA Images/LightRocket via Getty Images)
SOPA Images/LightRocket via Getty Images
Monday.com Ltd (NASDAQ: MNDY), which provides cloud-based work operating systems for project management, CRM, marketing, and software development, witnessed its shares plummet by 30% over the last five days. This decline occurred despite a positive earnings report, as forward-looking indicators did not align with what investors anticipated. The conservative guidance coupled with concerns regarding web traffic variability due to changes in Google’s search algorithms sparked a sentiment-driven sell-off, rather than signaling any substantial deterioration in fundamentals.
The $13 billion SaaS company recorded $299 million in revenue (+30% YoY) along with an adjusted EPS of $1.09, both figures comfortably surpassing consensus forecasts. However, the management’s conservative outlook for Q3, only minor upgrades for the full-year guidance, and statements regarding uncertainty in search traffic undermined bullish sentiment. Our multi-factor assessment — which evaluates Growth, Profitability, Financial Stability, and Downturn Resilience — indicates that while MNDY remains operationally sound, concerns regarding valuation and volatility continue to be significant. If you’re looking for upside with reduced volatility compared to individual stocks, the Trefis High Quality Portfolio offers an alternative, having outperformed the S&P 500 with total returns exceeding 91% since its inception. Additionally, take a look at Ethereum: ETH Price To $10,000?
Let’s delve into the specifics of each assessed factor.
[1] Valuation Looks Very High
Monday.com is trading at a significant premium compared to the S&P 500, with a price-to-sales ratio of 12.8 against 3.2 and a price-to-free cash flow multiple of 252.8, which is over ten times the index’s 23.6. For further information, please see: MNDY Valuation Ratios
[2] Growth Is Very Strong
In the past three years, MNDY’s revenue has expanded at an average annual growth rate of 43.1%, significantly outpacing the S&P 500’s 5.7%. In the last twelve months, revenue surged by 32% to $1.0 billion from $784 million, compared to a 5.0% increase in the index. For additional details, refer to: MNDY Revenue Comparison
[3] Profitability Appears Weak
Although Monday.com reported a modest net income of $53 million over the past year (a margin of 5.1%), its operating income was a negative $6.2 million (a margin of -0.6%) compared to the S&P 500’s 18.6%. However, the positive aspect is its strong cash generation, exhibiting $331 million in operating cash flow with a margin of 31.9%, well above the index’s 20.3%. For further insights, see: MNDY Operating Income Comparison
[4] Financial Stability Looks Very Strong
The company’s leverage is minimal, with only $123 million in debt and a 0.9% debt-to-equity ratio, compared to the S&P 500’s 21.8%. Liquidity is exceptional — cash and equivalents account for 86% of total assets ($1.6 billion out of $1.8 billion), while the index shows only 6.9%.
[5] Downturn Resilience Is Very Weak
Historically, Monday.com has been significantly more susceptible to market downturns than the S&P 500. During the inflation crisis of 2022, the stock decreased by 82.8% from its peak of $444.70 in November 2021 to $76.46 a year later, while the index experienced a 25.4% decline during the same period. Unlike the S&P 500, which bounced back within 464 days, MNDY has not yet regained its pre-crisis peak, reaching a high of $327.92 in February 2025 and currently trading at $172.
However, the risk is not confined solely to major market crashes. Stocks can decline even during favorable market conditions — think of situations such as earnings reports, business updates, and changes in outlook. To see how the stock has rebounded from sharp declines in the past, read MNDY Dip Buyer Analyses.
Looking for Smarter Alternatives?
Monday.com is experiencing rapid growth, boasts strong financial stability, and maintains an impressive cash position — but it also comes with a high price tag and has historically shown vulnerability to market shocks. If you have faith in the long-term perspective, being patient for a more favorable entry point could be beneficial.
You might consider exploring the Trefis Reinforced Value (RV) Portfolio, which has outperformed its all-cap stocks benchmark (a combination of the S&P 500, S&P mid-cap, and Russell 2000 benchmark indices)and generated strong returns for its investors. What is the reason behind this? The quarterly rebalanced mix of large-, mid-, and small-cap RV Portfolio stocks has provided an effective way to capitalize on positive market conditions while minimizing losses when markets decline, as explained in RV Portfolio performance metrics.
