MNDY Stock Has a Case of the Mondays—Buy Before the Rebound

Key Points

• Monday.com's stock price plunge is a golden opportunity for a deeply undervalued stock.
• The analysts forecast a solid double-digit upside at the low end of their range.
• Full-year guidance was improved; the sticking point is a tepid Q3 outlook that is likely to be cautious.

Monday.com’s NASDAQ: MNDY August price plunge is not easy for its stockholders to watch, but there is good news. The drop is a knee-jerk reaction to tepid news compounded by relatively high short interest that discounts the company’s long-term outlook. It will likely not last long.

Trading at roughly 7x the long-term earnings forecast ahead of the release, the nearly 20% price plunge deepened the value in this well-positioned cash-generating machine. Monday.com is a leader in workflow management and AI-empowered automation. Its technology and services enable organizations to automate workflows, manage projects more efficiently, and streamline operations, and are gaining traction with businesses and industries worldwide. 

There Was Nothing Wrong With Monday.com’s Q2 Results

Monday.com reported a solid quarter with only two things marring the results. The first point is that growth is slowing sequentially, and compared to last year, the second is that the Q3 guidance was only as expected.

The takeaway for investors is that growth was expected to slow, results were better-than-forecast, and Q3 guidance had been sufficient to sustain the higher share price ahead of the release; there is no reason why it shouldn’t be afterward. 

The more critical detail is that the Q2 strengths are expected to linger, and the full-year guide was improved. As of early to mid-August, the company's forecast indicates revenue growth of roughly 26%, which is 200 basis points hotter than MarketBeat’s reported consensus.

Due to the business trends, this may be considered cautious guidance. 

The Q2 results are solid. The company outperformed MarketBeat’s reported consensus by more than 100 basis points, growing revenue by nearly 27% compared to last year.

The gains were driven by an 8% increase in clients and an 11% increase in existing business, driven by the company’s largest client groups. They grew by 36% and 46% respectively. 

The margin news is also healthy. The company increased its R&D and faced expense hurdles, but managed to outperform the market’s expectations. The net result is a 100-basis-point contraction in the adjusted operating margin and $1.09 in adjusted EPS, up only 16% year-over-year (YOY) compared to the 26.6% top-line advance, but more than 2500 basis points better than expected and sufficient to produce a significant gain in shareholder value.

Monday.com Builds Value for Shareholders

Monday.com’s balance sheet health and growth are tied to dilutive share sales, but the company deploys capital efficiently and produces value for investors. The 2% YOY increase in share count and increased liability are offset by increased cash, current and total assets, which lifted equity by 18% year-to-date.

Equity is expected to continue rising as the year progresses and drive robust support from the sell-side.

Institutions, which own about 75% of the stock, provide a solid support base in 2025, and they are buying on balance as of mid-Q3 2025. The analysts, the vocal portion of the group, also provide solid support with their coverage increasing, sentiment firming, and price targets rising ahead of the release, indicating a deep value.

Already trading below the low-end of the analysts' range ahead of the release, the post-release price plunge puts the stock well below, suggesting a minimum of 50% upside with the potential for a 75% gain at the consensus. 

Monday.com’s price decline may extend to even deeper levels, but there are signs that support is strong near $200. Numerous price upswings, including two in 2024 and two in early 2025, not only show support at the $200 level but also rising support aligning with an uptrend.

The likely outcome is that, based on the results, valuation, and trends of institutions and analysts, this level will continue to serve as support. The market may consolidate near $200 before rebounding, but a rebound and fresh long-term highs are likely within a few quarters.